Question

Question 14 5 pts The supply function for slow cookers is S(p) = p - 5, while the demand function is D(P) = 317 - p. In the above equations, p is the price of a slow cooker. The government imposes a $48 tax on the producers of slow cookers. Calculate the price that the supplier receives for a slow cooker. Question 15 5 pts The demand function is: D (p) = 42 - p, while the supply function is S(p) = p - 18. In the above equations, p is the price of the good. The equilibrium price is 30, while the equilibrium quantity is 12. The government introduces a $10 tax on produces that leads to the price a consumer pays to be $35, and the price a supplier receives to be $25. Calculate the deadweight loss resulting from the introduction of this tax.

Answer 1

a) Equilibrium occurs when demand supply:

p - 5 = 317 - p

p = 151

Put value of p in either demand or supply equation, q = 156

Tax of $10 is imposed on the same ratio of demand curve touching price axis - Equilibrium price and equilibrium price - supply curve touching price axis which is (317 - 161) / (161 - 5) = 156 / 156 = 1

Thus tax of consumers and producers would fall equally which means tax of 24 on each side. Producer will receive 161 - 24 = 137 and consumer will pay 161 + 24 = 185

Prin 317 -supply 185- - - - N 161- 137 - - - - Demend 132 151 317 Puontity

b) Equilibrium occurs when demand supply:

42 - p = p - 18

p = 12

Put value of p in either demand or supply equation, q = 30

Deadweight loss is of area A + B whose sum is (1/2) * (12 - 7) * (35 - 25) = 25

prado a frien