Homework Answers
The deadweight loss is a real cost of the tax caused by the reduced consumption under the tax.Trades that were otherwise beneficial are lost because of the tax. The deadweight loss of a tax will be smaller if:
Demand is less elastic (i.e., the quantity demanded is not substantially affected by the tax) and Supply is less elastic (i.e., the quantity supplied is not substantially affected by the tax) .
So answer to first question should be product B.
Cigarettes tend to have inelastic demand.
Add Answer to:
The curves to the left show the demand and supply for three different products (A, B...
PROBLEM: Consider a competitive market characterized by the following supply and demand formulas: Demand: P =...
PROBLEM: Consider a competitive market characterized by the following supply and demand formulas: Demand: P = 105 - 0.25QD Supply: P = 0.275QS (a) Show the supply and demand curves and the equilibrium price and quantity in this market in a diagram. (b) With the aid of a diagram, carefully explain what would happen in this market if the government were to impose a price floor of $80 per unit in this market. As part of your answer, calculate the...
Consider a perfectly competitive market for a good with the following supply and demand curves: Qd=...
Consider a perfectly competitive market for a good with the following supply and demand curves: Qd= 400–P and Qs= 80 + 4P a. Calculate the change in equilibrium quantity, and the size of the deadweight loss that will result if a unit tax of $10 is imposedon consumers of this good. Draw a graph that illustrates how you arrived at your answer. b. Suppose the demand curve changes to: Qd’= 376-0.6P First, verify that the pre-tax equilibrium is approximately the...
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....
QUESTION 12 Figure: The graph below shows a demand curve and four supply curves 1 Price...
QUESTION 12 Figure: The graph below shows a demand curve and four supply curves 1 Price Refer to Figure. If a tax is imposed in the above market then which supply curve will have highest deadweight lossi a. S2 Oc. SA. d.53. QUESTION 18 When boats are taxed and sellers of boats are required to pay the tax to the government, a. there is a movement downward and to the right along the demand curve for boats. Ob the quantity...
The figure shows supply and demand curves before the introduction of a specific tax. Which of...
The figure shows supply and demand curves before the introduction of a specific tax. Which of the following statements is correct? D A PO D 0 $ P. tax S $ Po P: S 0 0 Q. (a) Demand is more elastic than supply at price po. (b) When a specific tax is introduced the price paid by consumers increases by less than the price received by producers falls. (c) The consumers bear a smaller proportion of the specific tax...
33. The following diagram shows the domestic demand and supply curves for sunglasses. Assume that...
33. The following diagram shows the domestic demand and supply curves for sunglasses. Assume that the world price for sunglasses is $10 per unit. 60 50 45 40 35 30 20 15 10 200 400 600 800 1000 Part : With no trade allowed, what are the equilibrium price and equilibrium quantity for sunglasses? Part 2: If the country allows free trade, (a) how many sunglasses will domestic consumers demand and how many sunglasses will domestic producers produce? (b) Will...
8. Suppose the market demand and market supply curves are given by the equations: e =...
8. Suppose the market demand and market supply curves are given by the equations: e = 200-(P-40) &$ = 3P 4p-20u-to Now a tax 40 is placed on buyers so that the consumption can be reduced. 8-1 What quantity will be bought and sold after the tax is imposed? [10 point) 8-2 How much tax revenue will be collected after this tax is imposed? [10 point] 8-3 What will be the deadweight loss from this tax? [10 point Instead of...
(1 point) The following graph shows the American supply and demand curves for cameras. Both curves...
(1 point) The following graph shows the American supply and demand curves for cameras. Both curves are straight lines. Japanese cameras, which are identical to American cameras, can be purchased in any quantity for a price of $8 per camera. How many cameras do American's buy? How many cameras do American firms sell? How many cameras are imported from Japan? Suppose the U.S. government imposes a tariff of $4 per Japanese camera. How many cameras are imported? Does the tariff...
Basic Microeconomics D-S Analysis: Suppose the demand and supply curves are specified as: Qa = 100-P...
Basic Microeconomics D-S Analysis: Suppose the demand and supply curves are specified as: Qa = 100-P & Q. =P -20. (a) What is the equilibrium price and quantity in this market? (b) Solve for producer surplus and consumer surplus at equilibrium. (c) Construct a D-S diagram depicting (a) and (b) above. (d) Suppose the government sets a price ceiling = $50. i. Solve for the surplus or shortage at this price. ii. Solve for the resulting consumer surplus and producer...
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....
QUESTION 12 Figure: The graph below shows a demand curve and four supply curves 1 Price Refer to Figure. If a tax is imposed in the above market then which supply curve will have highest deadweight lossi a. S2 Oc. SA. d.53. QUESTION 18 When boats are taxed and sellers of boats are required to pay the tax to the government, a. there is a movement downward and to the right along the demand curve for boats. Ob the quantity...
The figure shows supply and demand curves before the introduction of a specific tax. Which of the following statements is correct? D A PO D 0 $ P. tax S $ Po P: S 0 0 Q. (a) Demand is more elastic than supply at price po. (b) When a specific tax is introduced the price paid by consumers increases by less than the price received by producers falls. (c) The consumers bear a smaller proportion of the specific tax...
33. The following diagram shows the domestic demand and supply curves for sunglasses. Assume that the world price for sunglasses is $10 per unit. 60 50 45 40 35 30 20 15 10 200 400 600 800 1000 Part : With no trade allowed, what are the equilibrium price and equilibrium quantity for sunglasses? Part 2: If the country allows free trade, (a) how many sunglasses will domestic consumers demand and how many sunglasses will domestic producers produce? (b) Will...
8. Suppose the market demand and market supply curves are given by the equations: e = 200-(P-40) &$ = 3P 4p-20u-to Now a tax 40 is placed on buyers so that the consumption can be reduced. 8-1 What quantity will be bought and sold after the tax is imposed? [10 point) 8-2 How much tax revenue will be collected after this tax is imposed? [10 point] 8-3 What will be the deadweight loss from this tax? [10 point Instead of...
(1 point) The following graph shows the American supply and demand curves for cameras. Both curves are straight lines. Japanese cameras, which are identical to American cameras, can be purchased in any quantity for a price of $8 per camera. How many cameras do American's buy? How many cameras do American firms sell? How many cameras are imported from Japan? Suppose the U.S. government imposes a tariff of $4 per Japanese camera. How many cameras are imported? Does the tariff...
Basic Microeconomics D-S Analysis: Suppose the demand and supply curves are specified as: Qa = 100-P & Q. =P -20. (a) What is the equilibrium price and quantity in this market? (b) Solve for producer surplus and consumer surplus at equilibrium. (c) Construct a D-S diagram depicting (a) and (b) above. (d) Suppose the government sets a price ceiling = $50. i. Solve for the surplus or shortage at this price. ii. Solve for the resulting consumer surplus and producer...
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