Calculate the dead-weight- loss

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Question 1.

Suppose the market for cigarettes is characterized by the following information:

Qd=70-5P [Demand] Qs =3P-10 [Supply]

Suppose the government imposes a sales tax of $2 per unit.

Calculate the Dead-Weight- Loss due to the sales tax.

Question2.

Suppose the market forwinein the U.S. is characterized by: Qd = 100 - 20P [Demand]

Qs = 20 + 20P [Supply]

The market for wine in the rest of the world is characterized by:

Qd = 80 - 20P [Demand] Qs = 40 + 20P [Supply]

Calculate the deadweight loss if the U.S. imposes a prohibitive tariff per unit of imported wine.

[Note: P = price per unit; Qd = billions of units demanded; Qs = billions of units supplied]

Reference no: EM13790989

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