MACROECON MYECONLAB CODE+STUDENT PKT>IC
MACROECON MYECONLAB CODE+STUDENT PKT>IC
7th Edition
ISBN: 9781323914359
Author: HUBBARD/KNAPP
Publisher: PEARSON C
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Chapter 4, Problem 4.4.4RQ
To determine

The deadweight loss by the tax.

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The demand and supply of ethanol are given by QD = 8,000 – 2,000P and QS = 1,000P – 1,000, where P is price per gallon and Q measures gallons per minute. Suppose the government subsidizes ethanol at $0.30 a gallon that the producer pays. What does the subsidy cost the government? After the subsidy, what is the producer surplus? After the subsidy, what is the consumer surplus? After the subsidy, what is the deadweight loss?
Suppose the government imposes a tax of $20 million per month on cable producers. If Comcast wants to maximize its profit, what price per subscription should it charge per month?
What are the implications of such a subsidy for economic efficiency and Consumer and Producer Surplus?

Chapter 4 Solutions

MACROECON MYECONLAB CODE+STUDENT PKT>IC

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