The figure below shows market demand, social demand and market supply.What is the optimal per-unit tax/subsidy that will make the market efficient?PricebC$3dMarket Supply$2$1Market Demand2040Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.à$1 tax$2 subsidy$3 subsidy$1 subsidySocial DemandQuantity

"Market equilibrium occurs at a point where market demand intersects market supply. But with…

The figure below shows market demand, social demand and market supply. What is the optimal per-unit tax/subsidy that will make the market efficient? Price $3 b C d Market Supply $2 $1 Market Demand 20 40 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer a $1 tax $2 subsidy $3 subsidy $1 subsidy Social Demand Quantity

The figure below shows market demand, social demand and market supply. What is the optimal per-unit tax/subsidy that will make the market efficient? Price $3 b C d Market Supply $2 $1 Market Demand 20 40 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer a $1 tax $2 subsidy $3 subsidy $1 subsidy Social Demand Quantity

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 10P

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Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
A market is described by the following supply and demand curves:Supply: P=0.25QDemand: P=300-0.75Q(a) Solve for the equilibrium price and quantity and calculate the total economic surpluswith a diagram.(b) Suppose government sets a price floor of $90. With the price regulation, calculatewith a diagram the sizes of shortage (or surplus), consumer surplus, produce surplusand deadweight loss.(c) Instead of a price floor, government regulates the price by a price ceiling of $90.Predict the change of market efficiency if the government imposes a price ceiling of$90.(d) Instead of a price control, government levies a $20 excite tax on producers. Formulatethe new supply curve and solve for the new equilibrium price and quantity. Calculatewith a diagram the tax revenue and the tax incidences for both producers andconsumers. Discuss how buyers and sellers share the tax burden by applying relevanttheories and an appropriate diagram.
To determine the optimal amount of a public good to supply, the government must know Question 9Answer a. the price elasticity of demand of each buyer. b. the supply curve of the government. c. everyone's valuation for the public good. d. the revenue of selling the good.
The following graph represents the demand and supply for blinkies (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. PRICE (Dollars per blinkie) 64.00 48.00 32.00 Demand A B D F 20 C E 40, 48 40 Supply QUANTITY (Blinkies) ?
Suppose the equations below represent the market supply and demand for cellular service. QD = 50 – 0.25P QS = 2P – 76 a. Graph the supply and demand curves, and label the equilibrium quantity and price. b. Calculate the amount of Consumer Surplus and Producer Surplus in this market. c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold. d. Calculate the amount of deadweight loss associated with this per-unit tax. e. Calculate the share of the tax burden that the sellers bear. f. Briefly explain why there is a relationship between the slopes of the supply and demand curves, and the tax burden on each side of the market.
Identify at least one positive externality from running a donut shop. Identify at least one negative externality from running a donut shop. Explain how these positive and negative externalities could impact the donut shop’s profits. (Hint: think subsidy for positive externality and tax for negative externality.) Draw two graphs that show the price of donuts before and after the positive and negative externality impacted the price of your donuts.
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?
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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.
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