The demand and supply curves for a product are given by q=1500-10p and q=40p-1200, respectively, where p is the price and q is the quantity of the product. (a) Find the equilibrium price and quantity. p=54 q=960 (b) A sales tax of 6% is imposed on consumers. Find the new equilibrium price and quantity. p=? q=? (c) How much tax is paid on each unit? Tax per unit: $? (d)At the new equilibrium price and quantity, how much of the tax is paid by consumers, and how much by producers? (e) What is the total tax revenue received by the government?

The demand and supply curves for a product are given by q=1500-10p and q=40p-1200, respectively, where p is the price and q is the quantity of the product. (a) Find the equilibrium price and quantity. p=54 q=960 (b) A sales tax of 6% is imposed on consumers. Find the new equilibrium price and quantity. p=? q=? (c) How much tax is paid on each unit? Tax per unit: $? (d)At the new equilibrium price and quantity, how much of the tax is paid by consumers, and how much by producers? (e) What is the total tax revenue received by the government?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section6.4: The Relationship Between Taxes And Elasticity

Problem 4ST

See similar textbooks

Similar questions

A company manufactures and sells x television sets per month. The monthly cost and price-demand equations are C(x)=75,000+60x and p(x)=300−x/30, 0≤x≤9000. , 0≤x≤9000 (A) Find the maximum revenue. (B) Find the maximum profit, the production level that will realize the maximum profit, and the price the company should charge for each television set. (C) If the government decides to tax the company $4 for each set it produces, how many sets should the company manufacture each month to maximize its profit? What is the maximum profit? What should the company charge for each set?
Consider an ad-valorem tax on a good X. The Demand for good X is constant elasticity with elasticity -2. The Supply for good Y is constant elasticity with elasticity 3. Consider the same setting as for the previous question. When a tax of 1% of the price is imposed on good X, then equilibrium quantity of X exchanged declines by what percentage?
If no tax is put in place, the equilibrium price is $ _____ per Uver ride. With the tax in place, the price paid by buyers per Uver ride will increase to $ _________ With the tax in place, the after-tax price per ride received by Uver drivers will be $ _________
Market demand for Mandrake roots is given by Q=425-2P and marketsupply is given by Q=5P. The government of Sodden needs money, so it imposes a per unit tax of $5 on mandrake root. How much tax revenue do they raise with this tax?
A company manufactures and sells x television sets per month. The monthly cost and price-demand equations are C(x)=74,000+40x and p(x)=250−x/20 0 ≤ x ≤ 5000. (A) Find the maximum revenue. (B) Find the maximum profit, the production level that will realize the maximum profit, and the price the company should charge for each television set. (C) If the government decides to tax the company $4 for each set it produces, how many sets should the company manufacture each month to maximize its profit? What is the maximum profit? What should the company charge for each set?
Market supply of Mandrake root is given by Q=4P. The government ofimposes a per unit tax of $5 and producers pay the tax. What is thehighest market price of Mandrake at which producers will sell at least 34units?
The annual demand and supply for liquor in a certain state is given by the following equation: Qd= 500,000 − 20,000P Qs=30,000P where P is the price per gallon and QD is quantity of gallons demanded per year. a. Suppose that a $1-per-gallon tax is levied on the price of liquor received by sellers. Use both graphic and algebraic techniques to show the impact of the tax on market equilibrium. b. Calculate (i) the excess burden of the tax, (ii) the amount of revenues collected, and (iii) the incidence of the tax between buyers and sellers.
Market demand for Mandrake roots is given by Q-273-3P. The government of imposes a per unittax of $7 and consumers pay the tax. What is the highest market price of Mandrake at whichconsumers will buy at least 25 units?
The demand function for beef is Qd = 100 – 3P and supply function for beef is Qs = 10 +2P. Price elasticity of demand is – 0.1 and price elasticity of supply is 0.02. ii. Calculate new price of beef in the market when government introduces a specific tax of N$0.25 per kg.
A project requires signing buying 500 cubic yards of concrete per week for the next year from the only local provider. The currently price is $100 per yard and the provider sells 5,000 yards per week. Assuming marginal cost is constant, elasticity of demand at the current price is -1.5, and using a linear demand approximation, estimate the opportunity cost of the weekly government purchase. The METB is 0.2. Note you will need to find the original demand, the new demand, the new price, and the new quantity purchased by those other than the government in the process.
(ch3) In a small country, the demand and supply of turbo jets are represented by QD = 1,000 - P and QS = 2P - 500. Which of the following statements is (are) TRUE?I. The equilibrium price is $700.II. At a price ceiling of $200, there are 0 supplies.III. At a price ceiling of $300, there is an excess demand of 600 units.A) I and IIIB) II and III C) II D) III
A AWB Company is interested in obtaining quick estimates of the supply and demand curves for coal. The firm's research department informs you that the elasticity of supply is approximately 1.7, the elasticity of demand is approximately -0.85, and the current price and quantity are $41 and 1,206, respectively. Price is measured in dollars per ton, quantity the number of tons per week. Estimate linear supply and demand curves at the current price and quantity. Illustrate both curves on a diagram. What impact would a 10% increase in demand have on the equilibrium price and quantity? Illustrate this impact on similar diagram in part (i) If the government refused to the price increase when demand increased in (ii) above,how much shortage is created?. Mark the shortage on the diagram in part (ii)