Price, Pt ps subsidy Pe subsidy pB Subsidy S Per unit subsidy D Quantity, Q QE Qsubsidy Look at the figure above where a subsidy has been imposed on the good. What does a subsidy do? ( Does it lead to a deadweight loss? Why or why not? Show/explain this - you may attach images if it's easier. (

Price, Pt ps subsidy Pe subsidy pB Subsidy S Per unit subsidy D Quantity, Q QE Qsubsidy Look at the figure above where a subsidy has been imposed on the good. What does a subsidy do? ( Does it lead to a deadweight loss? Why or why not? Show/explain this - you may attach images if it's easier. (

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 7P

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Question

Price, P
ps
subsidy
Pe
p8
subsidy
Subsidy
S
Per unit subsidy
D
QE Qsubsidy
Look at the figure above where a subsidy has
been imposed on the good.
What does a subsidy do? (
Does it lead to a deadweight loss?!
Why or why not? Show/explain this - you
may attach images if it's easier. (3
Quantity, Q

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PDemand QDemand PSupply QSupply $10 0 $1 2 $9 3 $2 4 $8 6 $3 6 $7 9 $4 8 $6 12 $5 10 $5 15 $6 12 $4 18 $7 14 If the Government creates a quota of 6 units to reduce the consumption of the dangerous product, what will the price of the good be in the marketplace? How much deadweight loss is there? How much of the deadweight loss came from the consumers?
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz determineThe equilibrium prices and quantities of all three goods are? The government decides to: Impose a 25% Tax on X? Impose a 5 Rs /unit Tax on Y? Give a 10% subsidy on good z? Analyze the impact of each of these policies separately on equilibrium prices and quantities? Also calculate changes in consumer and producer surpluses, and amount of revenue earned by the government? Repeat this exercise when policies (a, b), (b, c) and (a, b, c) are jointly implemented. Which policy choice is best? Why? Provide theoretical justification (using diagrams) of all results obtained?
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Suppose the demand and the supply for lumber (harvested wood processed in a sawmill) used for construction in Australia are given byQD =100 – 2PQS = 1/2PAssume also that the market is perfectly competitive. the government introduces a subsidy of s=5 per unit of lumber transacted in the market. Calculate the deadweight loss caused by the subsidy and illustrate it in a graph. Who benefits more from the subsidy, consumers or producers? Why?
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are. The government decides to: a) Impose a 25% Tax on X b) Impose a 5 Rs /unit Tax on Y c) Give a 10% subsidy on good z Analyze the impact of each of these policies separately on equilibrium prices and quantities. Analyze the impact of each of these policies separately on equilibrium prices and quantities. Provide theoretical justification (using diagrams) of all results obtained
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The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are? The government decides to: a) Impose a 25% Tax on X? b) Impose a 5 Rs /unit Tax on Y? c) Give a 10% subsidy on good z? Analyze the impact of each of these policies separately on equilibrium prices and quantities? Analyze the impact of each of these policies separately on equilibrium prices and quantities?
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