MICROECONOMICS(LL); CNCT 21 2018 >IP<
21st Edition
ISBN: 9781260389470
Author: McConnell
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 4RQ
To determine
Relevance of sugar tax.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose the market demand for milk is
Qd = 40 – 4P
Where Qd is millions of gallons demanded and P is price per gallon. Suppose the market supply for milk is
Qs = - 40/3 + 20/3P
Suppose demand for milk is relative elastic and demand for gasoline is relatively inelastic. Holding all else constant,
A.taxing milk will generate lower deadweight losses than the same tax on gasoline.
B.taxing milk will generate the same deadweight losses relative the same tax on gasoline.
C.taxing milk will generate greater deadweight losses than the same tax on gasoline.
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.
Within its first three years, the 2012 Chevy Volt fell in value 62 percent to $12,997 in 2015. And a 2012 Nissan Leaf fell in value 66 percent to $10,220. That’s −22 percent a year, whereas the typical gasoline car depreciates −24, −15, and −12 percent its first three years (51 percent) for a −17 percent average per year. Indeed, at the extreme, a Honda Accord is worth fully 64 percent after three years (−12 percent average per year). Clearly, the steep decline in gasoline prices in 2014 contributed to electric-powered vehicles depreciating recently much faster than gasoline powered vehicles. But hybrid-electric vehicles such as the Nissan Leaf and Chevy Volt and all-electric vehicles such as the Chevy Bolt face another problem as well?
1.) What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If that issue affected resale value at year 5, would that affect perceived value-in-use? How exactly?
Chapter 5 Solutions
MICROECONOMICS(LL); CNCT 21 2018 >IP<
Knowledge Booster
Similar questions
- Please answer questions 2, 3, and 4. 2. Many states are now imposing severance taxes on resources being extracted within their borders. How is the consumption path of depletable resources with severance taxes imposed compared to the case without taxes? Assuming an increasing marginal extraction cost of depletable resources over time. A. For the same time period, consumption for depletable resource decreases due to the imposition of severance taxes. B. For the same time period, consumption for depletable resource increases due to the imposition of severance taxes. C. For the same time period, consumption for depletable resource stays the same regardless to the imposition of severance taxes. 3. Suppose there exists a renewable energy substitute for depletable resources with an increasing marginal extraction cost. How would per-unit subsidy on renewable energy change price path for renewable energy? A. Price for renewable energy with subsidy is higher than the case without subsidy. B.…arrow_forwardThe short-run market demand and supply curves for good X are as follows: QD = 20 - 4P QS = 7 + 2.5P Find the equilibrium price and quantity before the imposition of the tax. What is the price actually paid by the demanders (Pd) due to a quantity or specific tax of $1 per unit collected from the buyers? What is the price actually received by the suppliers (Ps) due to a quantity or specific tax of $1 per unit collected from the buyers? What is the after- or post-tax quantity? What is the total revenue after the imposition of the quantity or specific tax? How much of the tax do consumers pay (in percent)? How much of the tax do producers pay (in percent)?arrow_forwardSuppose 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_forward
- There are many possible ways to limit the number of cabs in a city. The most common method is an explicit quota using a medallion that is kept forever and can be resold. One alternative is to charge a high license fee each year, which is equivalent to the city’s issuing a medallion or license that lasts only a year. A third option is to charge a daily tax on taxicabs. Using figures, compare and contrast the equilibrium under each of these approaches. Discuss who wins and who loses from each plan, considering consumers, drivers, the city, and (if relevant) medallion owners.arrow_forwardPlease answer all 4 subparts, Thank You! The entire economy consists of two industries, Industry 1 and Industry 2. Their production functions are as follows: Y1 = A1K1^1/3L1^2/3 and Y2 = A2K2^1/3L2^2/3 Assume that the price, P1, and P2, A2, K1, and K2 are fixed. [1a] Suppose that A1 = 3, K1 = 1280, L1 = 20, P1 = 30, A2 = 2, K2 = 1080, L2 = 40, P2 = 60. Calculate w1 and w2. If A1 increases from 3 to 6, what is the new nominal wage rate offered by Industry 1? If Industry 2 offers the same wage rate, what is the new quantity of labor Industry 2 hires? How much does the output of Industry 2 fall? [Hint: K1, L1, P1, A2, K2, and P2 stay unchanged] [1b] According to part [d], how many jobs does Industry 2 lose? Which type of unemployment is this? Is the entire economy better off or worse off in the short run due to the increase in A1? How to prove it? What about the long run? [1c] If the people in the economy still want the same amount of output which used to be produced by Industry 2,…arrow_forwardMy perspective is that the interests should be the paramount concern of government trade poly between producers and consumers for different reasons. The key interests for the producers would be the economic growth and maintaining a competitive domestic industry. These two ideas are very important for business and their employees because these two parts are the key for how producers will make enough money for their company. In addition, rules that will support a competitive domestic industry will help reserve jobs and will still have competition. Consumers are very important because they will benefit from the competitive trade that is out there for good competitive prices. The whole goal of consumers is that they make trade very beneficial, so the interests should be towards the consumers as well. please help reply to this discussion post, needs to be 150 words at leastarrow_forward
- In 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_forwardSuppose the market for used cars has 50% good cars (peaches) and 50% bad cars (lemons). There are an unlimited number of potential buyers. Buyers are willing to pay $9,000 for a good car and $3,000 for a bad car. Sellers value good cars at $6,500 and bad cars at $1,000. p1. If both buyers and sellers know whether cars are good or bad, which cars will sell in the market and at what price or prices? p2. If neither buyers nor sellers know whether cars are good or bad, which cars will sell in the market and at what price or prices? p3. If only sellers know whether cars are good or bad, which cars will sell in the market and at what price or prices? Justify your answer.arrow_forwardWhen the price is 10 TL for each pack of cookies, the supply is 250 thousand and the demand is 120 thousand boxes.When the price is 9,5 TL for each pack of cookies, the supply is 200 thousand and the demand is 240 thousand boxes. Since the price-demand and supply-demand equations are linear; Find and interpret the market equilibrium point after-tax if the consumer is taxed at a rate of 0,75 TL per product.arrow_forward
- You are the country manager of a firm that produces and markets a generic type of soft drink in a competitive market in Ghana. In addition to the large number of generic products in your market, you also compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for your product. In addition, Coke and Pepsi launches an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the market outcomes of generic soft drinks if effect of the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft drink? [Explain with an appropriate graph]arrow_forwardYou are the country manager of a firm that produces and markets a generic type of soft drink in a competitive market in Ghana. In addition to the large number of generic products in your market, you also compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for your product. In addition, Coke and Pepsi launches an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the market outcomes of generic soft drinks if effect of the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft drink?arrow_forwardTwo firms sell an identical product in a market by setting prices simultaneously. Consumers buy from the firm that offers the lower price; if the prices are identical, the firms split the demand. If ? is the lowest price (in dollars), aggregate demand is ? = 250 − ?. Suppose prices can only be set in increments of 1 cent. (a) Suppose Firm 1 and Firm 2 have limited production capacities of 40 units each. The marginal cost of firm 1 is $35 and the marginal cost of firm 2 is $25. If Firm 1 believes that Firm 2 will set a price of $30, what price should Firm 1 set? Show your work. (Assume efficient rationing while calculating firm’s residual demand.) (b) Ignore the information in part (a). Suppose each firm has unlimited capacity, but that the marginal costs of Firm 1 and Firm 2 are $40 and $150 respectively. Do ?1 = 149.99 and ?2 = 150 satisfy the requirements of a Nash equilibrium? Explain why. You must explain why a strategy is a best response or not to the other strategy.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education