Calculate the tax revenue in the post-tax equilibrium

Reference no: EM13203907

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.

i) Calculate the magnitude of the consumer surplus and producer surplus in the pre-tax equilibrium.
ii) Calculate the tax revenue in the post-tax equilibrium.
iii) Calculate the change in consumer surplus due to the sales tax.
iv) Calculatethechangeinproducersurplusduetothesalestax.
v) Calculate the Dead-Weight-Loss due to the sales tax.

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

Reference no: EM13203907

Questions Cloud

Define the inventory level vs time for a reasonable number : A company has an annual requirement for 150,000 parts, which cost $125 each. The parts require processing having a $4,000 setup cost. Each part occupies 0.5 sqft of floor space in the factory. Floor space has a total cost of $12.50 per square foot..

What is the probability that woman will use a credit card : The store found that 75% of all sales made to credit card users were for purchases of the new line of sportswear, while 30% of all sportswear sales were for the purchase of the outdated fashions. Records indicate that credit cads are used in 80% o..

Calculate the impact of the debt and equity : Using the information above together with the two following scenarios calculate the impact of the debt and equity financing alternatives if weather is good which will increase attendances and increase EBIT to $600,000

Media-culture compare with standard academic communication : How does the communication tone and style in the field of media and culture compare with standard academic communication? How is it similar? How is it different?

Calculate the tax revenue in the post-tax equilibrium : 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. i) Calculate the magnitude of the consumer surplus and producer surplus i..

Primaries of 2008 democratic race : Explain how Obama defeated Clinton during the primaries of 2008 Democratic race?

How many solutions are there to the equation : What do the solutions represent? Is there a solution that does not make sense? If so, in what ways does the solution not make sense?

Compute the net present value and payback period : Compute the Net Present Value, Payback Period and the Internal Rates of Return for each alternative and on the basis of your analysis in question 2, which of the alternatives would you recommend

Moderate-intensity activity : What is the predominant fuel used by muscle cells during low- or moderate-intensity activity?

User Account

All Pages