MICROECONOMICS W/ CONNECT
21st Edition
ISBN: 9781308196077
Author: McConnell
Publisher: MCG/CREATE
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Chapter 5, Problem 4RQ
To determine
Relevance of sugar tax.
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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?
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