Refer to the graph shown. Assume the market is initially in equilibrium at point b in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from So to S1. The lost consumer surplus from this tax is equal to the area: Price S1 P1+t P2 SO P1 P2-t Demand Q2 Q1 Quantity O cab. O P2P1bc. O P1(P2 - tlab. O cdb. to ....

Refer to the graph shown. Assume the market is initially in equilibrium at point b in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from So to S1. The lost consumer surplus from this tax is equal to the area: Price S1 P1+t P2 SO P1 P2-t Demand Q2 Q1 Quantity O cab. O P2P1bc. O P1(P2 - tlab. O cdb. to ....

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter17: Taxation And Resource Allocation

Section: Chapter Questions

Problem 4TY

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The following graph represents the demand and supply for pinckneys (an imaginary product). The black point (plus symbol) indicates the pre-tax equilibrium. Suppose the government has just decided to impose a tax on this market; the grey points (star symbol) indicate the after-tax scenario. Complete the first table, given the information presented on the graph. In the second table, indicate which areas on the previous graph correspond to each concept. Check all that apply.
Q3 Consider the following demand and supply equations Q subscript d open parentheses P close parentheses equals 2410 minus 3 P Q subscript S open parentheses P close parentheses equals 100 plus 12 P Suppose that the government imposes a $30 tax on the product Assume that the sellers collect the tax from buyers and submit the tax to the government Calculate the price that sellers receive after the tax is imposed (i.e., the price excluding the per unit tax they submit to the government)
Consider the following demand and supply function of product ZT: Qd = 25 - 1.25 P Qs = -9 + 3 P Note: Determine the equilibrium point first to answer the following question. 5. How much is the total surplus, with out sales tax? Use a number, 2 decimal values, no commas, no space, no signs. * 6. How much is the consumer surplus, with out sales tax? Use a number, 2 decimal values, no commas, no space, no signs. *
The demand and supply in a perfectly competitive market are QD = 60 - p and QS = 2p , respectively. The government wants to impose an excise tax $t per unit in order to collect at least $450 of tax revenues. What is the minimum amount of inefficiency (DWL) implied by such a tax?
The demand for mineral water is P=10 – (2/3) Q and supply function for mineral water isP=1+(1/3)Qa) Find the equilibrium price and quantity and Price elasticities of demand and supply.b) Suppose a unit tax (t) is imposed on suppliers (t= 3TL). Find the new equilibrium.c) Find the price that consumers pay and the price that producers get after the tax.d) What is the burden of the tax on producers and consumers and explain how the tax burden isrelated to elasticities? thank you in advance.
Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to decide between two options: Maintain the number of quotas and let the market adjust, orMaintain the price support and increase the number of quotas. Suppose now that the government decides to increase the number of quotas available to 72 units, but it keeps the price support at the current level of $72. Calculate: i) the consumer Surplusii) the producer surplusiii) deadweight loss HINT: Sketch the supply and demand equations. Which of the two options would be preferred by the producers? Which of the two options would be preferred by society as a whole?
Q2: Suppose the demand function isp = 50 - 2q………………1and the supply function isp = 10 + 3q…………….2c) Suppose the government imposes a per unit tax of $5 on producers, what would be the effect of this tax on market clearing price and quantity? ( show your answers)d) Find the consumer and producer tax burden.e) Calculate the tax revenue that the government received. Only solve d and e
Suppose the market demand for milk is Qd = 40 – 4P Where Qd is millions of gallons demanded and P is price per gallon. Suppose the market supply for milk is Qs = - 40/3 + 20/3P Calculate tax revenue for tax rates of $3, $4 and $5 per gallon of milky. Tax revenue reaches a maximum at A.a tax rate greater than $5 per gallon of milk. B.$5 per gallon of milk. C.$4 per gallon of milk. D.$3 per gallon of milk.
A competitive market with the following supply and demand curves is in equilibrium. Supply: p^s=20+2Q, Demand: p^d=110−Q --> Q^e=30 and p^e=$80 If the government imposes a tax of $15 per unit on the sellers in this market, what share of the tax burden will the buyers bear?
Tax incidence.Given:Demand (D): P = 100 – 1.5 Q Q* = 40 P*=40Supply (S): P = 20 + 0.5 Qa. Suppose a specific tax of P10 per unit is imposed on producers.i. What is the new supply function?ii. Solve for the new equilibrium quantity and price after the tax is imposed.b. How much will the consumer pay for the good (price)?c. How much will the producer sell for this good (price)?d. What is the amount of total tax revenues?e. Who bears the burden of tax? Why?f. Calculate the elasticity of demand and supply to validate your answer in letter e. Discuss youranswers.
C) Given the following information: QD- 240-5P QS= P Where QD is the quantity demanded, QS is the quantity supplied and P is the price. Suppose the government decided to impose tax of $12 per unit on sellers in this market. Determine quantity after tax
Q2: Suppose the demand function isp = 50 - 2q………………1and the supply function isp = 10 + 3q…………….2a) Find the market clearing price and quantity (equilibrium point)b) Sketch a graphc) Suppose the government imposes a per unit tax of $5 on producers, what would be the effect of this tax on market clearing price and quantity? ( show your answers)d) Find the consumer and producer tax burden.e) Calculate the tax revenue that the government received.