Question

1) Assume that the market demand and supply functions for Nice to See book factory shelves are:

QD = 720 - 12P (Market Demand)
QS = -240 + 20P (Market Supply)

where QD is the market demand of book shelves, QS is the quantity of book shelves produced and P
is the market price per unit.

(i) Calculate the equilibrium quantity and price for the book shelves before and after the
imposition of a RM15 per unit tax. (12 marks)
(ii) Calculate consumer deadweight loss caused by the imposition of the RM15 per unit tax by the
government.

2) As a monopoly firm, Rainbow supplies cakes in a small town. Assume that the market supply and
meet demand conditions for bakery market in the small town are as below:
Q s = -22 + 4P (Market Supply)
Q D = 650 - 8P (Market Demand)

where
Q D = quantity demanded of cake (in thousand unit)
Q S = quantity supplied of cake (in thousand unit)
P = market price of cakes

(i) Calculate the equilibrium price and output of cakes. (4 marks)
(iii) Calculate the equilibrium price and output of cakes after the imposition of RM3 per unit tax.
(6 marks)
(iii) Calculate the deadweight loss caused by the imposition of the RM3 per unit tax. Determine
the amount of deadweight loss suffered by consumers and producers, respectively. (5 marks)

Answer 1

As per HOMEWORKLIB RULES in case of multiple questions only the first question is to be attempted

Kindly ask rest of the questions in a separate post