2. Assume demand is given by Qd= 250-2P and supply is given by Qs= -25 +...
2. Assume demand is given by Qd= 250-2P and supply is given by Qs= -25 + 3.5P.
A. Sketch the market indicating the reservation price and minimum selling price.
B. Determine the equilibrium price and quantity and show this on your graph.
C. Now assume the government levies a $5 excise tax on the buyer. Determine the new demand equation and the new price paid by the buyer including the tax. Show this on your graph in part A.
D. Re-sketch your original demand, supply and equilibrium here before the tax. Now, place the $5 tax on the seller instead and determine the new supply equation and the price in the market after the tax. Show this on your graph.
Homework Answers
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2. Assume demand is given by Qd= 250-2P and supply is given by
Qs= -25 +...
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Question 6A Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P...
Question 6A Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit sold is imposed, (a) Considering that the government will earn revenue, overall, do you think that society benefits from such a move Yes or no and why? Explain also effect on Buyer Price? Effect on Seller Price? Effects on Quantity traded? Question 6b Given the following information: Demand: Qd = 200 – 5P Supply: Qs =...
Question 6A Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P...
Question 6A Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit sold is imposed, (a) Considering that the government will earn revenue, overall, do you think that society benefits from such a move? Explain. Yes or No? Buyer Price? Seller Price? Quantity traded? Question 6b Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit...
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The market demand and supply is described by the following equations QD = 250 - 2P QS 3P 1) Find the market equilibrium. 2) What is the CS, PS, and W in this market? 3) Assume that the government introduces a equilibrium? price ceiling of p = 15. What is the new 4) Find the change in CS, PS, and W. Is there Dead Weight Loss? if so, of how much? 5) What does this tell you about the welfare...
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Given the following market equations:
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