Price (dollars per gallon) 2.00 1.50 1.00 Price Ceiling 60 20 0 10 20 30 40 50 60 70 80 90 100 110 120 Drinking water (in thousands of gallons) The price ceiling depicted in the above figure results in consumer surplus increasing from $30 thousand to $34.5 thousand. producer surplus decreasing from $24 thousand to $6 thousand. O a deadweight loss of $16 thousand. Both answers A and B are correct. S

Price (dollars per gallon) 2.00 1.50 1.00 Price Ceiling 60 20 0 10 20 30 40 50 60 70 80 90 100 110 120 Drinking water (in thousands of gallons) The price ceiling depicted in the above figure results in consumer surplus increasing from $30 thousand to $34.5 thousand. producer surplus decreasing from $24 thousand to $6 thousand. O a deadweight loss of $16 thousand. Both answers A and B are correct. S

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 2CQQ

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Federal excise taxes on gasoline vary widely across the developed world. The United States has the lowest taxes at USD $0.40 per gallon (or Â£0.07 per liter), Canada has taxes of $0.60 per gallon, Japan and much of Europe is $2.00 per gallon, while Britain has the highest tax at $2.83 a gallon or Â£0.5 per liter. If gasoline taxes are intended to reduce the time losses from road congestion in urban environments and gasoline pre-tax costs about Â£0.40 per liter, why might the optimal tax in Canada be 50 percent higher than in the United States? What would be an explanation for why adjacent countries would have such different estimates of the price elasticity of demand for auto driving?16
Q4: Consider the market (supply and demand) for Wheat.Qd = 100 - 0.6P…………1Qs = -30 + 2P……...…...2a. Find the market equilibrium price and quantity?b. Find the market equilibrium price and quantity After imposing an ad valorem tax on production by 5% of good price.c. Find the market equilibrium price and quantity if producers receive a production subsidy of 10 SR per unit produced.
If a tax of $1.20 is imposed on consumers in this market, what is the new consumer surplus? a. 7500 b. 1150 c. 9250 d. 6750
Q. 2 The market demand and supply functions for potato are: Qd = 40 - 8P Qs = 30P + 12 To assist the producers, the government initiates a subsidy of $0.2 per unit. What would be the change in the consumer surplus? [Choose thec closest answer] Group of answer choices 4.67 2.82 3.03 4.38 2.65 3.15 3.65 2.97
Given the demand and supply equations : P + 1/2QD = 10 3P - Qs = 17 a) Find the equilibrium price and quantity. b) Tax of $2 per good is imposed, find the new equilibrium price and quantity. c) Find the extra pay by the supplier and government tax revenue.
Q3: Consider the market for pineapples in a small island nation.Qd = 80 - 2P…………1And Qs = 20 + 3P………...2a. What is the market equilibrium price and quantity?b. Suppose the government imposes a per unit tax of $6 on consumers, find the new market equilibrium? ( show your answers)c. What is the tax share tolerated by each consumer and producer.
5. Assuming a $9 per unit subsidy is implemented, the welfare gain to consumers will be $______. a) 12 b) 14 c) 16 d) 19 e) 21 f) 22.5 g) 45 h 66 i) 82.5 j) 148.5 k) 171
Qd=160-5P and QS=-11+4P. Governement imposed a tax of $3.00 on the buyer. Calculate: a. Producer surplus after tax b. Deadweight loss c. Government revenue
Question 3 The market demand and supply functions for cotton are: QD =10–0.04PandQS =38P–20. Calculate the consumer and producer surplus. To assist cotton farmers, suppose a subsidy of R0.10 a unit is implemented. Calculate the new level of consumer and producer surplus. Did the increase in consumer and producer surplus exceed the increased government spending necessary to finance the subsidy?
The supply and demand curves for corn are as follows: QD = 3,750 - 725P QS = 920 + 690P,where Q = millions of bushels and P = price per bushel. a. Calculate the equilibrium price and quantity that would prevail in the free market. b. The government has imposed a R2.50 per bushel support price. How much corn will the government be forced to purchase? c. Calculate the loss in consumer surplus that would occur under the support program.
Demand and supply equations for housing market per month are given below.• Demand for housing: ?? = 2500 − 0.5 ?• Supply of housing: ?? = −500 + ? A) Suppose that the government set a rent ceiling at $1800. What are the quantities ofhousing supplied and demanded at this price? In this case, is there a shortage orsurplus of houses?B) How does the price ceiling affect the efficiency in the housing market?C) Calculate the deadweight loss in the housing market after the price ceiling isimposed by the government.D) Calculate the potential spending for housing search activities.
Assume supply of a rice: QS = 1800 + 240P, 1981 Demand for rice: QD = 3550 - 266P.What is the market clearing price? Assume now that government wants to support a priceof $3.60/kg and thus buys the additional amount from the market. Find the change inconsumer surplus, cost to the government and gain of the producer. Instead of pricesupport if government gives a supply restriction of 1500 kg what would happen?