Consider the demand and supply for strawberries to be given by Qd%3D10-0.33P and Qs = -6 + P,and the government imposes per unit tax of $T, such that a total government revenue of $32 isgenerated at a new equilibrium price of $18. What is the amount of the per unit tax in this case?Select one:A.$8.В.$1.77.C.$10.D.$12.

The correct option is option a. The workings are given in the next step.

Answered: Consider the demand and supply for…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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Consider a product that is fixed on supply QS=4 and the demand for the product is givenby QD= 10-2P. The government imposes a unit tax of 2 TL per kg on the consumer.a) What is the price paid by consumer and producers before the tax and after the tax?b) Find the total tax burden, burden on consumers and burden on producers.c) Suppose that supply schedule is changed to QS= 4+P. Redo the above questions and compare the results thanks in advance
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 Calculate tax revenue for tax rates of $3, $4 and $5 per gallon of milky. Tax revenue reaches a maximum at A.a tax rate greater than $5 per gallon of milk. B.$5 per gallon of milk. C.$4 per gallon of milk. D.$3 per gallon of milk.
The equilibrium price of a good is $30. Supply of this good is more elastic than demand. 5uppase the government introduces a tax on the good. in this case, the price receved by producers is $24, and the price paid by consumers is 1.6 times more.Calculate the tax cost per good for the group bearing most of the tax burden if necessary, round any intermediate calculations and your final answer to two decimal places. $______
Suppose demand is D and supply is S0 so that equilibrium price is $10. If an excise tax of $6 is imposed on this product, what happens to the equilibrium price paid by consumers? The price received by producers? The number of units sold?Equilibrium price paid by consumers: $ Price received by producers: $ Number of units sold:
Suppose the demand for cigarettes is Q = 15 - 0.5Pand the supply of cigarettes is Q = P - 3, where P is the price per pack of cigarettes. Suppose the government imposes a cigarette tax of $3 per pack. (a) What is the price paid by producers and price faced by consumers? (b) What is the government revenue from the tax and What is the total dollar amount of tax revenue that is ultimately paid by consumers (i.e. consumers' tax burden)? (c) What is the excess burden of the tax?
a. The market demand and supply functions for VCR movie rentals are:QD=10-0.04P and QS=3.8P+4.Suppose that VCR movie rentals are taxed at $0.25 per unit. Calculate:i. the equilibrium quantity and price, point elasticity of demand in equilibrium andproducer surplus without tax.ii. the revenues generated by the tax, the loss in producer surplus and percentageof the burden of the tax falls on producers?b. Determine the "rule-of-thumb" price when the monopolist has a marginal cost of $25and the price elasticity of demand of -3.0.
if you were told that the demand and the supply of a good are given by Qd= 25-0.25P and Qs=-10+P, and that the government imposes a $25 per unit tax on buyers. this will result in reduction in the total economic surplus of _____ and a tax incidence such that ____ will be borne by sellers. a) $84.5, 75$ b) $325, 80% c) $33.8, 20% D) $62.5, 25%
Refer to the graph shown. Assume the market is initially in equilibrium at point j in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from SO to S1. The amount of revenue the government will collect from this tax is equal to the area of: Price a b C 9 O O rectangle chie. triangle ach. O triangle egi. O rectangle bkjd. h E # k $1 SO Demand Wy Quantity
Consider a market with an equilibrium quantity of 100 and an equilibrium price of $40. Suppose the government imposes a $20 tax per unit on consumers, after which the quantity sold in the market reduces to 70. What is the deadweight loss of the tax and government revenue from tax? A deadweight loss of $300 and a government tax revenue of $1400. A deadweight loss of $600 and a government tax revenue of $1400. A deadweight loss of $300 and government tax revenue of $600. A deadweight loss of $600 and a government tax revenue of $600.
The market demand is Qd=12 - 0.04P The market supply is Qs=3.8P + 4 Questions: 1) Calculate the equilibrium qty and price 2) Calculate the elasticity of demand at equilibrium point Supposed each unit is taxed $0.25: 3a) calculate the revenue generated by tax 3b) calculate loss in consumer surplus and the percentage of the burden of the tax paid by consumers. 3c) calculate loss in producer surplus and the percentage of the burden of the tax paid by producers.
4. Assume that the demand function for a commodity is given by 2. and that the supply function is given by 2, =1+0.05P where P is the price, Q, is the quantity demanded and Q, is the quantity supplied. Suppose the government levies a tax of t Ghana Cedis per unit sold so that the producer receives (p-t) Ghana Cedis if the consumer pays p Ghana Cedis per unit. If the market is in equilibrium and the tax is increased, how will the price, quantity and tax revenue change once equilibrium has been attained?
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 a tax of $1 per gallon of milk is imposed in this market. What is the new price paid by consumers and What is the quantity of milk sold? *Hint: It does not matter if the tax is collected from purchasers or sellers.

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