Suppose that a buyer values a house at $240,000 and a seller at $200,000.Choose a price that both buyer and sell can agree on.Define buyer and seller surplus and from part a identify the buyer and seller surplus.Explain how the government is able to collect taxesSuppose there is a 25% sales tax paid by the seller. What happens to the deal you described in part a.

Answered: Suppose that a buyer values a house at…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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Suppose that a buyer values a house at $240,000 and a seller at $200,000.

1. Choose a price that both buyer and sell can agree on.
2. Define buyer and seller surplus and from part a identify the buyer and seller surplus.
3. Explain how the government is able to collect taxes
4. Suppose there is a 25% sales tax paid by the seller. What happens to the deal you described in part a.

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$T h e b u y e r v a l u e s a h o u s e a t $ 240, 000 S e l l e r v a l u e s t h e h o u s e a t $ 200, 000$

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