Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 22, Problem 5DQ
To determine
The price trends in the agricultural and industrial sectors.
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Suppose demand and supply are given by: (LO3, LO4)
Qx d = 14 − 1/2 Px and Qx s = 1/4Px − 1
a. Determine the equilibrium price and quantity. Show the equilibrium graphically.
B. Supposed a $ 12 excise tax is imposed on the good. Determine the new equilibrium price and quantity
C. How much tax revenue does the government earn with the $12 tax
(Last Word) The combined cost of Social Security and Medicare programs was what percent of U.S. GDP in 2008
(A) 7.6
(B) 12.4
(C) 17.2
(D) 2.9
Domestic Demand Function:
p= 80-4Q
Domestic Supply Function:
p= 20+2.5Q
There is an international trade price equal to $15 (pw=15). Although, TheGovernment institutes an import tariff of $9 per unit. Suppose that instead of an import tariff, the government wanted to put an import quota that would make the same change in Producer Surplus as the $9 tarrif
A) What is the size of this import Quota that makes this same change in Producer Surplus as the $9 Tariff? B) What is the Deadweight Loss under this Import Quota?
Chapter 22 Solutions
Economics (Irwin Economics)
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Similar questions
- Consider the market for product ABC, when the price is at Php 12, quantity demanded is 6 units and quantity supplied is 3 units. An eight pesos increase in the price would change quantity demanded by 2 units and quantity supplied by 4 units. 1. If the government imposed Php 0.75 tax, how much would be the tax burden of the seller?2. At equilibrium point, how much is the consumers surplus? how much is the total surplus 3. What is the elasticity of supply for the product at equilibrium point? how about the elasticity of demand at equilibrium point?arrow_forwardSuppose demand and supply are given by: Q^d=14-0.5P and Q^s=0.25P-1. Determine the equilibrium quantity and price in this market. Show the equilibrium graphically. Suppose a $12 excise tax is imposed on the good.Determine new supply and the new equilibrium quantity and price. How much does producers' revenue change? How much tax revenue does the government earn?arrow_forwardA5 In a closed economy, the demand and the supply function for a given commodity are QD =150-2p and QS = - 50+2p, respectively. Suppose that the government provides a subsidy equal to16 Euros per unit of quantity supplied. Determine the price the producers receive, the price the consumers pay, the total sales, and the cost to the taxpayers in the industry equilibrium with the subsidy.arrow_forward
- Suppose the demand for a product is given by P = 30 - 3Q. Also, the supply is given by P = 10 + Q. If a $4 per-unit excise tax is levied on the buyers of a good, the deadweight loss created by this tax will be о $24 O None of these O $4 0 $8 О $16arrow_forwardConsider the market for product ABC, when the price is at Php 12, quantity demanded is 6 units and quantity supplied is 3 units. An eight pesos increase in the price would change quantity demanded by 2 units and quantity supplied by 4 units. 1. At equilibrium point, how much is the producers surplus?2. How much would the producer receive when tax is imposed? 3. If the government imposed Php 0.75 tax, how much would be the tax burden of the buyer?arrow_forwardAssume the following values for attached figures: Q1 = 20 bags. Q2 = 15 bags. Q3 = 27 bags. The market equilibrium price is $45 per bag. The price at a is $85 per bag. The price at c is $5 per bag. The price at f is $59 per bag. The price at g is $31 per bag. Apply the formula for the area of a triangle (Area = ½ × Base × Height) to answer the following questions. LO4.2 a. What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output level is being produced? How large is the dollar value of the consumer surplus at that output level? b. What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced? c. What is the dollar value of the deadweight loss when output level Q3 is produced? What is the dollar value of the total surplus when output level Q3 is produced?arrow_forward
- Suppose demand and supply are given by Qd= 60 - P and Qs= 10P - 20. a. What are the equilibrium quantity and price in this market? b. Determine the quantity demanded, the quantity supplied and the magnitude of the surplus if a price floor of $50 is imposed on this market. c. Determine the quantity demanded, the quantity supplied and the magnitude of the shortage if a price floor of $29 is imposed on this market. Also determine the full economic price paid by consumers.arrow_forwardIn Figure 3.7, applying a $1.05 specific tax causes the equilibrium price to rise by 70¢ and the equilibrium quantity to fall by 14 million kg of pork per year. Using the pork supply function and the original and after-tax demand functions, derive these results using algebra. Figure 3.7arrow_forwardIf the tax code exempts the first $20,000 of income from taxation and then taxes 25 percent of all income above that level, then a person who earns percent and a marginal tax rate of $50,000 has an average tax rate of percent. O 15, 25 O 25, 15 O 25, 30 O 30, 25arrow_forward
- Suppose there is a market that has market demand characterized as X = 30P/3. Suppose further that market supply can be written as X = P/2 2. (A) Find the equilibrium price and quantity in this market. (B) If a unit tax of $16 is imposed on good X, what are the equilibrium price, quantity, and tax revenue in the market?(C) Suppose an ad valorem tax of 30 percent is imposed on good X. The after - tax demand equation would be X = 30 P/2. Now find the equilibrium price, quantity, and tax revenue in the market. (D) What can be said about the amount of tax revenue generated under each taxing scheme, and why?arrow_forwardSuppose demand and supply are given by Qd = 40 - P and Qs = 1.0P - 20. a. What are the equilibrium quantity and price in this market? b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $34 is imposed in this market. c. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $24 is imposed in the market. Also, determine the full economic price paid by consumers.arrow_forwardSuppose demand and supply are given by: (LO3, LO4)Qx d = 14 − 1/2 Px and Qx s = 1/4Px − 1a. Determine the equilibrium price and quantity. Show the equilibrium graphically.arrow_forward
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