Homework Answers
New supply is Ps = 0.25Qs + 5 - 5 or Ps = 0.25Qs
At new equilibrium we have
Qs = Qd
-0.75Qd + 15 = 0.25Qs
Q = 15 units
Now cost to the government = subsidy x quantity purchased
= $5 * 15
= $75
Hence, total cost to government is $75
Add Answer to:
2. Calculate the total cost to government of a $5 subsidy given that Ps = 0.25Qs+5...
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1. Calculate the CS, PS, the externality cost, and overall surplus in the absence of the...
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the various triangles, we get the results as outlines in the table
below. When calculating the external costs, it is easiest to simply
subtract the area under the supply curve from the area under the
SMC curve.)
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1. Calculate the CS, PS, the externality cost, and overall
surplus in the absence of the tax. Then calculate these again under
the tax, taking into account the tax revenue raised. Calculating
the various triangles, we get the results as outlines in the table
below. When calculating the external costs, it is easiest to simply
subtract the area under the supply curve from the area under the
SMC curve.)
2. What is the DWL from not having the Piguvian tax?...
Question 6 1 pts The sugar market has a supply curve with formula: Ps = 2 +0.1Qs, and demand cuve: Pd = 55-0.320d What is the consumer surplus? O 3264 O 3176 O 2548 2792 Next Previous D Question 7 1 pts The sugar market has a supply curve with formula: Ps = 2 +0.1Qs, and demand cuve: Pd = 55-0.32Qd The government imposes a price floor of 22.9 Approximately what is the new equilibrium quantity for sugar? O 96...
(Chapter 16 in the book) Problem 7. The demand for olive oil is given by 120 - 4p, and the supply of olive oil given by 2p, -30, where pa is the price paid by consumers (demanders) and p, is the price received by producers (suppliers) measured in dollars per hundred gallons. Quantities demanded and supplied are in hundred-gallon units. (a) Draw the demand curve and the supply curve using different colors. (b) Write an equation that you need to...
5. Suppose the demand and supply functions are given by QD 15-P Qs- P-5, where QD and Qs are the quantities and P is the price. a) Graph the demand curve and supply curve. [Hint: label each axis, the price and quantity b) Calculate the equilibrium price and quantity; add these values to the graph and label them as c) Suppose demand decreases by 1 unit at each price. What is the new demand function? Add the d) Calculate the...
5) (28 points) Suppose the demand and supply for flu shots are given by pd = 1200-Q ps = 440 + Q Suppose flu shots generate a positive externality, and the marginal external benefit (MEB) is MEB=60 -0.050. (a) Derive the marginal social benefit (MSB) curve. (b) Draw the Demand, Supply, and MSB curves on the same graph (with P on the vertical axis and Q on the horizontal axis) and clearly indicate the curves in your graph. (c) Calculate...
Suppose demand is given by PD-20- .03QD and supply is given by PS-6+ .04QS. 2. Now suppose the government imposes a S3.5 tax on suppliers (e) What is the total welfare? (f) What is the deadweight loss? 3. Which equilbrium is more efficient?
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