MICROECONOMICS CONNECT ACCESS
2nd Edition
ISBN: 9780077491703
Author: BERNHEIM
Publisher: MCG
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Textbook Question
Chapter 2, Problem 1CP
The demand function for a product is Qd = 100 − BdP. Suppose that there is a tax of t dollars per unit that producers must pay and that the supply function for the product when the tax is t and the
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Suppose that the demand for a good is described by the inverse demand function p = 10 - 3q and the supply of the good is given by the inverse supply function p = 2 + 2 q:
Q: Suppose the government imposes a $1 per unit tax on suppliers. Now what is the price the seller will receive and quantity of the good in this market?
Suppose the following demand and supply function of a commodity. 15
Qd = 55 - 5P
Qs = -50 + 10P
After imposing tax, the new supply function is
Qs = -60 + 10P
Find out the equilibrium price and quantity before tax.
Demand for apples is given by the function P=50-4q while supply is given by P=10+q. If a per-unit tax of $15 is placed on apples, What is new price after tax?
Chapter 2 Solutions
MICROECONOMICS CONNECT ACCESS
Ch. 2 - Prob. 1DQCh. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6P
Ch. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Suppose the demand function for jelly beans in...Ch. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Suppose the annual demand function for the Honda...Ch. 2 - Prob. 13PCh. 2 - The demand function for a product is Qd = 100 ...Ch. 2 - Prob. 2CPCh. 2 - Prob. 3CPCh. 2 - Prob. 4CPCh. 2 - Suppose that the demand function for jelly beans...
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- The market for a particular consumer good has a demand function given by: q = 24 - p and supply given by p = q + q^2, where q is the quantity and p is the price. Question: If the government decided not to set the price, but instead imposed a tax on production of $1 per unit, effectively increasing the cost to supply by $1 dollar per unit for every level of quantity supplied, what would the new equilibrium quantity be?arrow_forwardAn individual utility function is given by U(x,y) = x·y. Let I = $800, px = $20 and py = $40. Suppose that a tax t of $10 per unit is imposed on good x. Assume that the full burden of this excise tax is borne by this consumer, i.e. the new price this individual faces for good x is p’x = px + t = $20+ $10 = $30. Compute this persons utility level with this excise tax. It is equal to?arrow_forwardA toy company is trying to determine the optimal price for their weekly supply to meet the demand for a toy they are about to release. They estimate that the supply function follows p= 0.006q^2 + 0.14q+ 8.62 and the demand function follows p= -1.25q+ 65 , where p is the price of the toy (in dollars) and q is the weekly quantity of the toy (in hundreds). If the company tries to sell the toy for $24, will there be a shortage or surplus of toys each week?arrow_forward
- A rice producing company faces the following demand function: Pd = 300 – 0.10Q. The firm’s accountant believes that the supply function of the company is given as: Ps = 100 + 0.10Q where P denotes price of a kilogram of rice GH¢ and Qd and Qs are the quantities demanded and supplied respectively. Based on this information: If the government now decides to impose a per unit tax of GH¢ 15 per unit on the quantity supplied and the company adjusts the supply function appropriately to include tax: Determine the new equilibrium price and quantity in the market for the company. Who pays a larger portion of the tax revenue? What is the total tax revenue to government? Calculate the deadweight loss to society. What type of elasticity of demand exists in the market? What type of elasticity of supply exists in the market after the tax imposition? Present graphically the results of the above questions. Given the type of price elasticity of demand in the market, what should the producer do to…arrow_forwardHarding Enterprises has developed a new product called the “Quest Simulator (QS)”. The market demand for this product is given as follows: Q = 240 - 4P. If QS is priced at $40, what is the point price elasticity of demand? Is demand elastic or inelastic? What is the maximum amount that consumers are willing to pay for the quantity demanded at the price of $40? (hint: it includes both the total expenditures and the consumer surplus) If the price of QS is increased slightly from $40, what will happen to the total expenditure on the product? What will happen to the consumer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardConsider an economy with a single consumer whose preferences are given by U = log(x) - , where x is consumption and labor supply. Assume that the consumption good is produced using labor alone with a constant-returns-to-scale technology. Units of measurement are chosen so that the producer prices of both the consumption good and the wage rate are equal to 1. a. Let the consumer’s budget constraint be qx = , where the consumer price is q = 1 + t, and t is the commodity tax. By maximizing utility, find the demand function and the labor supply function. b. Assume the revenue requirement of the government is 1 10 of a unit of labor. Draw the production possibilities for the economy and the consumer’s offer curve. c. By using the offer curve and the production possibilities, show that the optimal allocation with commodity taxation has x = 9/10 and = 1. d. Calculate the optimal commodity tax. e. By deriving the first-best allocation, show that the commodity…arrow_forward
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