Homework Answers
1) The most inelastic supply and demand curves are D’’,S’’ (because in this case given percentage change in price will have less change in quantity demanded or supplied in comparison to other cases)
2) D’,S’ (because in this case market is more elastic and with increase in elasticity deadweight loss also increases)
3) D’’,S’’ (because in this case market is inelastic and with decrease in elasticity deadweight loss also decreases)
4) Larger than (because D’’ is less elastic in comparison to D’)
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Suppose the government is studying the potential impact of a tax in various markets. The supply...
Suppose that a market is described by the following supply and demaod equations: QD 240-P Suppose...
Suppose that a market is described by the following supply and demaod equations: QD 240-P Suppose that a tax of T is placed on buyers, so the new demand equation is as follows: The new equilibrium price is now P 80, and the new equilibrium quantity is Q 160- Tax revenue is T x Q. Use the green points (triangle symbol) to graph tax revenue for the following tax (T) values: 0, 30, 90, 120, 150, 210, and 240. Laffer...
Draw a graph with two demand curves – one that is fairly elastic (labeled De) and...
Draw a graph with two demand curves – one that is fairly elastic (labeled De) and one that is fairly inelastic (labeled Di). Draw a supply curve and label it S. Suppose this market sees an increase in the price of this good due to the imposition of a tax. Draw the new supply curve and label it S2. Compare the impact in the market of the shift in supply between the elastic demand curve and the inelastic demand curve....
Assume that the market demand and supply curves for milk are as shown in the graph...
Assume that the market demand and supply curves for milk are as
shown
in the graph below.
As shown in the graph, the market clearing price is $3 per
gallon and the quantity
exchanged is 100 gallons per hour. Now assume that the
government imposes a tax of
2$ per gallon of milk produced.
a.
What is the total tax revenue the government will collect? Also,
shade
the area on your graph where the total tax revenue is
represented.
b....
What type of goods would you recommend that the government tax if it wants the tax...
What type of goods would you recommend that the government tax if it wants the tax to result in no deadweight loss? a. Inelastic goods with a price elasticity of demand and supply as close to infinity as possible b. Elastic goods with a price elasticity of demand and supply as high as possible c. Unit elastic good with a price elasticity of demand and supply as close to 1 as possible d. Inelastic goods with a price elasticity of...
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where th...
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16....
11. What type of goods would you recommend that the government tax if it wants the...
11. What type of goods would you recommend that the government tax if it wants the tax to result in no deadweight loss? Group of answer choices Unit elastic good with a price elasticity of demand and supply as close to 1 as possible Inelastic goods with a price elasticity of demand and supply as close to zero as possible Inelastic goods with a price elasticity of demand and supply as close to infinity as possible Elastic goods with a...
2. Tax Incidence: (8 points) Oil Market with Tax Supply w Tax 5.50 Supply Price ($...
2. Tax Incidence: (8 points) Oil Market with Tax Supply w Tax 5.50 Supply Price ($ per gallon) Demand 0.00 O 0.5 1 1.5 6.5 7 7.5 8 2 2.5 3 3.5 4 4.5 5 5.5 6 Quantity (Gallons of oil, millions) a. What is the competitive equilibrium price and quantity without government intervention? b. What is the consumer surplus (measured in dollars) in this market when there is no government intervention? c. What is the producer surplus (measured in...
The government is considering levying a tax of $60 per unit on suppliers of either concert...
The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for concert tickets is shown by De (on the first graph), and the demand for bus passes is shown by D. (on the second graph). Suppose the government taxes concert tickets. The following graph shows the annual...
Homework (Ch 08) 3. Relationship between tax revenues, deadweight loss, and demandelasticity The government is considering...
Homework (Ch 08) 3. Relationship between tax revenues, deadweight loss, and demandelasticity The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for concert tickets is shown by Dc (on the first graph), and the demand for bus passes is shown by Ds (on the second graph)....
Suppose that the demand curve and supply functions are qD = 300−5p and qS = 100+20p,...
Suppose that the demand curve and supply functions are qD = 300−5p and qS = 100+20p, respectively. (a) On the same graph, draw the demand and supply curves with price on the vertical axis. (b) What is the quantity and price in the equilibrium? (c) Calculate consumer surplus and producer surplus. (d) Suppose the government implements a $5 dollar per unit sales tax. i. Calculate the new quantity and the price paid by the consumer. ii. Calculate the consumer surplus,...
Suppose that a market is described by the following supply and demaod equations: QD 240-P Suppose that a tax of T is placed on buyers, so the new demand equation is as follows: The new equilibrium price is now P 80, and the new equilibrium quantity is Q 160- Tax revenue is T x Q. Use the green points (triangle symbol) to graph tax revenue for the following tax (T) values: 0, 30, 90, 120, 150, 210, and 240. Laffer...
Assume that the market demand and supply curves for milk are as
shown
in the graph below.
As shown in the graph, the market clearing price is $3 per
gallon and the quantity
exchanged is 100 gallons per hour. Now assume that the
government imposes a tax of
2$ per gallon of milk produced.
a.
What is the total tax revenue the government will collect? Also,
shade
the area on your graph where the total tax revenue is
represented.
b....
rice P4 Supply H D F G Demand Quantity 02 29. Refer to Figure 7-23 The figure depicts a market equilibrium where there is a tax on the good transacted. The deadweight loss as a result of the tax is represented by the area of a. A+B+D+F. b. C+H. c. B+D d. G+I Figure 8-16 Price Panel (b) Price Pasel (a) Sepply Dand Dand 1 2 34 5 67 Deantity 4 567 Denti- 1 2 30. Refer to Figure 8-16....
2. Tax Incidence: (8 points) Oil Market with Tax Supply w Tax 5.50 Supply Price ($ per gallon) Demand 0.00 O 0.5 1 1.5 6.5 7 7.5 8 2 2.5 3 3.5 4 4.5 5 5.5 6 Quantity (Gallons of oil, millions) a. What is the competitive equilibrium price and quantity without government intervention? b. What is the consumer surplus (measured in dollars) in this market when there is no government intervention? c. What is the producer surplus (measured in...
The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for concert tickets is shown by De (on the first graph), and the demand for bus passes is shown by D. (on the second graph). Suppose the government taxes concert tickets. The following graph shows the annual...
Homework (Ch 08) 3. Relationship between tax revenues, deadweight loss, and demandelasticity The government is considering levying a tax of $60 per unit on suppliers of either concert tickets or bus passes. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for concert tickets is shown by Dc (on the first graph), and the demand for bus passes is shown by Ds (on the second graph)....
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