Question

3 questions with explanations please thank u

Table 12-1 Weekend Ski Trip Value to Anna $150 Value to Brian $90 Nalue to Clem $75 Value to Dave $50 22. Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. The deadweight loss associated with the tax is a. $5. b. $12. C. $36. d. $41. Figure 9-18. On the diagram below, represents the quantity of peaches and Prepresents the price of peaches. The domestic country is Isoland. Domestic supply Domestic demand 10 20 30 40 50 60 e 23. Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $5, then the policy change results in a a. $25 decrease in consumer surplus. b. $20 increase in consumer surplus. c. $25 decrease in producer surplus. d. $20 increase in producer surplus. 24. Refer to Figure 9-18. Suppose Isoland changes from a no-trade policy to a policy that allows international trade. If the world price of peaches is $3, then the policy change results in a a. $15.00 decrease in producer surplus. b. $45.00 increase in consumer surplus. c. $20.00 increase in total surplus. d. $12.50 increase in total surplus.

Answer 1

Q. 22

a. $5

Due to this new tax, the increase in price will result in a decrease of one customer only.

Deadweight loss = 0.5 * (change in price) * (change in quantity)

DWL = 0.5 * 12 * 1

DWL = $6

Q. 23

a. $25 decrease in consumer surplus

If the world price is $5, then on this new price, there will be excess supply and a decrease in domestic demand.

Initially, the equilibrium price was $4 and output was 30, now price is $5 and the domestic quantity demanded is 20 while the quantity supplied is 45.

Initial consumer surplus = 0.5 * ($7 - $4) * 30 = 0.5 * 3 * 30 = $45

Nwe consumer surplus = 0.5 * ($7 - $5) * 20 = $20

Change in consumer surplus = $20 - $45 = - $25

Q. 24

d. $12.50 increase in total surplus

If the world price is $3, then on this new price, there will be excess demand and a decrease in supply.

Initially, the equilibrium price was $4 and output was 30, now price is $3 and the domestic quantity demanded is 40 while the quantity supplied is 15.

Change in consumer surplus = [0.5 * ($7 - $3) * 40] - [0.5 * ($7 - $4) * 30] = [0.5 * 4 * 40] - [0.5 * 3 * 30] = $80 - $45 = $35

Change in producer surplus = [0.5 * ($3 - $2) * 15] - [0.5 * ($4 - $2) * 30] = [0.5 * 15] - [0.5 * 2 * 30] = $7.5 - $30 = -$22.50

Change in total surplus = $35 - $22.50 = $12.50