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 sold is imposed,
(i)Equilibrium price before the tax?
(ii) Equilibrium quantity before the tax?
Calculate:
(c) Demand and Supply equation after the tax.
Demand equation?
Supply equation?
(I)Buyer's price after tax?
(ii) Seller's price after tax?
Question 6e
Given the following information:
Demand: Qd = 200 – 5P
Supply: Qs = 5P
If a quantity tax of $2 per unit sold is imposed,
Calculate:
(e) Quantity after tax ?
(f) Tax revenue?
(g) Deadweight loss of the tax?
Question 6h
Given the following information:
Demand: Qd = 200 – 5P
Supply: Qs = 5P
If a quantity tax of $2 per unit sold is imposed,
(h) What determines whether the buyer of the seller bears the burden of the tax?
Select one:
a. the elasticity of the demand curve
b. the elasticity of the supply curve
c. the elasticity of the supply and demand curve
d. the value of the tax
e. the price of the good
Answer:
Given:
Demand: Qd = 200 – 5P
Supply: Qs = 5P
Thus, 200 – 5P=5P=>10P=200=>P=200/10=20
and Q=5*20=100
Equilibrium price before tax=20
Equilibrium quantity before tax=100
Now, if a quantity tax of $2 per unit sold is imposed,
200 – 5P=5P-2=>10P=202=>P=202/10=20.2 and hence new Q=99
Government tax revenue=99*2=198
Equilibrium price after tax=20.2
Equilibrium quantity after tax=99
Deadweight loss of the tax=0.5*2*(20.2-20)=0.5*2*0.2=0.2
And whether the buyer of the seller bears the burden of the tax depends on the elasticity of the supply and demand curve.
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 =...
Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit sold is imposed, Calculate: (ii) Seller's price after tax Question 6e Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit sold is imposed, Calculate: (e) Quantity after tax Question 6f Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If...
Given the following information: Demand: Qd = 200 – 5P Supply: Qs = 5P If a quantity tax of $2 per unit sold is imposed, Calculate: (1)Demand and Supply equation after the tax. (2)Buyer's price after tax (3)Seller's price after tax (4)Quantity after tax
Que.1 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. choose one from each. a)yes or no > remain unchanged >decrease >yes >Increase >no b) Buyer Price >Remain unchanged >decrease >Yes >Increase >no c) Seller Price >remain unchanged >Decrease >Yes >Increase >No d)Quantity Traded...
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