Homework Answers
When a tax is imposed, it increases the tax revenue of the government and the price of the commodity.
Dead weight loss is a loss that the economy has to intake when the economy achieves equilibrium. It is an economic burden to the economy.
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Question 5 Consider the market for rice, which is perfectly competitive. Aggregate supply and demand are...
Question 2 (20 marks) Consider the market for gasoline, which is perfectly competitive. Each firm in...
Question 2 (20 marks) Consider the market for gasoline, which is perfectly competitive. Each firm in the industry produces gasoline with the same technology and has cost function: c(a) 200+5q+1/2xq. bach consumer has demand for gasoline given by g (p) 10-0.1p where p is the price of gasoline. All consumers have identical demand functions (a) Find the short-run supply curve for a typical firm. (5 marks) (b) Suppose there are 10 firms in the market. Find the short-run aggregate supply...
Suppose that the market demand and supply equations in a perfectly competitive market are QD =...
Suppose that the market demand and supply equations in a perfectly competitive market are QD = 16 − 4P and QS = −2 + 2P, respectively. What is the full economic price if the government imposes a price ceiling of $2?
Question 3 (32 marks) a The market of popcom is perfectly competitive. The market demand curve...
Question 3 (32 marks) a The market of popcom is perfectly competitive. The market demand curve and supply curve are as follows: Demand: Qp = 2000-P Supply: 2 = 1400 +2P Firm K is one of the many firms producing popcorn in the market. The total cost function and marginal cost function are as follows: TC(q) =1250 +30 +29 MC(q) - 30 +49 i At what output level (g) would the average total cost be minimized? (6 marks) ii What...
Question 5 (1 point) Suppose that in a perfectly competitive market, demand is given by Q...
Question 5 (1 point) Suppose that in a perfectly competitive market, demand is given by Q 56.0-P and supply is given by Q=P-13.0. The government imposes a per-unit excise tax of $1 on the good. What is producer surplus after the tax is imposed? No units, no rounding. Your Answer: Your Answer Question 6 (1 point) Suppose that in a perfectly competitive market, demand and supply are given by 100 bP QS P- 20 where b-1.0. The government imposes a...
Consider a perfectly competitive market for a good with the following supply and demand curves: Qd=...
Consider a perfectly competitive market for a good with the following supply and demand curves: Qd= 400–P and Qs= 80 + 4P a. Calculate the change in equilibrium quantity, and the size of the deadweight loss that will result if a unit tax of $10 is imposedon consumers of this good. Draw a graph that illustrates how you arrived at your answer. b. Suppose the demand curve changes to: Qd’= 376-0.6P First, verify that the pre-tax equilibrium is approximately the...
A perfectly competitive market is characterized by supply and demand as: Qd = 200 – 2Pd Qs...
A perfectly competitive market is characterized by supply and demand as: Qd = 200 – 2Pd Qs = ( −10 + 5Ps), when Ps ≥ 2 Qs=0, when Ps < 2 a. What is the equilibrium price and quantity in this market if there is no tax? b. Suppose the government imposes a tax of $7 on this market. What is the new market quantity? What happens to the price paid by buyers (Pd ) and received by sellers (Ps )?...
Question 1: In a perfectly competitive market, the demand curve is given as: Q=100-5P, the supply curve is given as Q=3P...
Question 1: In a perfectly competitive market, the demand curve is given as: Q=100-5P, the supply curve is given as Q=3P-12. Compute the total social surplus of this market. If the government impose a tax on the producers, and the tax rate is $2 per unit produced. What is the deadweight loss? If the government impose a tax on the consumers, and the tax rate is $2 per unit purchased, graphically show the change in the market equilibrium and the...
Suppose that in a perfectly competitive market, demand is given by Q=59.0-P and supply is given...
Suppose that in a perfectly competitive market, demand is given by Q=59.0-P and supply is given by Q=P-28.0. The government imposes a per-unit excise tax of $1 on the good. What is consumer surplus after that tax is imposed? No units, no rounding.
Suppose that in a perfectly competitive market, demand is given by Q=58.0-P and supply is given...
Suppose that in a perfectly competitive market, demand is given by Q=58.0-P and supply is given by Q=P-27.0. The government imposes a per-unit excise tax of $1 on the good. What is producer surplus after the tax is imposed? No units, no rounding.
The market for rice in a country has the following demand and supply functions: Demand function: ...
The market for rice in a country has the following demand and supply functions: Demand function: P = 6 – 0.5QD Supply function: P = 2 + 0.5QS Where QD is the quantity demanded, QS is the quantity supplied and P is the unit price of rice. Determine the equilibrium price, quantity, consumer surplus and producer surplus in the rice market. Illustrate your answers with a suitable rice market diagram. (8 marks) To help the rice farmers, the government has...
Question 2 (20 marks) Consider the market for gasoline, which is perfectly competitive. Each firm in the industry produces gasoline with the same technology and has cost function: c(a) 200+5q+1/2xq. bach consumer has demand for gasoline given by g (p) 10-0.1p where p is the price of gasoline. All consumers have identical demand functions (a) Find the short-run supply curve for a typical firm. (5 marks) (b) Suppose there are 10 firms in the market. Find the short-run aggregate supply...
Question 3 (32 marks) a The market of popcom is perfectly competitive. The market demand curve and supply curve are as follows: Demand: Qp = 2000-P Supply: 2 = 1400 +2P Firm K is one of the many firms producing popcorn in the market. The total cost function and marginal cost function are as follows: TC(q) =1250 +30 +29 MC(q) - 30 +49 i At what output level (g) would the average total cost be minimized? (6 marks) ii What...
Question 5 (1 point) Suppose that in a perfectly competitive market, demand is given by Q 56.0-P and supply is given by Q=P-13.0. The government imposes a per-unit excise tax of $1 on the good. What is producer surplus after the tax is imposed? No units, no rounding. Your Answer: Your Answer Question 6 (1 point) Suppose that in a perfectly competitive market, demand and supply are given by 100 bP QS P- 20 where b-1.0. The government imposes a...
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