Suppose the government imposes a $10 per unit tax on a good (see diagram below) causing buyers to pay $18 for the item compared with an original equilibrium price of $12. What is the tax revenue the government collects from the sale of this item? Price 24 22 20 A 18 Supply 16 14- 12 10- H 6. 4 K M Demand 2. 369 12 15 18 21 24 27 30 33 36 39 Quantity $100 $80 O $120 O$60 +++

Suppose the government imposes a $10 per unit tax on a good (see diagram below) causing buyers to pay $18 for the item compared with an original equilibrium price of $12. What is the tax revenue the government collects from the sale of this item? Price 24 22 20 A 18 Supply 16 14- 12 10- H 6. 4 K M Demand 2. 369 12 15 18 21 24 27 30 33 36 39 Quantity $100 $80 O $120 O$60 +++

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For the demand curve shown, find the total amount of consumer surplus that results in the gasoline market if gasoline sells for $2 per gallon. Price ($/gallon) 12 11 10 9 8 7 6 5 4 327 1 0 Demand for gasoline 100 10 20 30 40 50 - %% Quantity (1,000s of gallons/year) 110 >120 Instructions: Enter your response as a whole number. Consumer surplus: $ per year.
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2. The demand and supply functions of a gcod are given by P = -Qd + 125, 2P = 3Qs + 30. Determine the equilibrium price and quantity. Determine ako the effect on the market equilibrium if the govemment decides to impose a fixed tax of GHC5 on each good Who pays the tax? (p = 81, q = 44, then p = 83, q = 42) 3. If fixed costs are 18, variable costs per unit are 4, and the demand function is P = 24 - 2Q. Obtain an expression for n in terms of Q and hence sketch a graph of n against Q. a) For what values of Q does the firm break even? (q = 1 or 9) b) What is the maximum profi? (n = 32 at q = 5) 4. Given the supply and demand functions P = Q? + 12Q, + 32, P = -Qå - 4Qa + 200, Calculate the equilibrium price and quantiy. (p = 140, q = 6)
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