Drink tax the weekly supply qsp and demand qdp of beer in a

Reference no: EM13377875

Drink Tax: The weekly supply Qs(p), and demand, Qd(p), of beer in a city are given by: Qs(p) = p; Qd(p)=6.2 - .55*p where p is the price of a beer in dollars and quantities are in hundreds of thousands of beers. To find the equilbrium quantity and price I equated the two and found quantity and price to be 400,000 and $4. Now a 10% tax on retail alcohol sales has been introduced.

a) How much is consumed after the introduction of the tax (the new equilibrium) and what price will consumers pay?

b) What fraction of the tax hike is passed to consumers?

c) What are the consumer surplus, producer surplus, and tax revenue collected by the government?

d) Calculate the deadweight loss (DWL) induced by the tax. How can DWL be interpreted as inefficiency?

Reference no: EM13377875

Questions Cloud

Nbsppace automation corporation in cookeville tennessee : nbsppace automation corporation in cookeville tennessee must choose the better economical alternative between the two

1 are the following statements true or false explain in : 1. are the following statements true or false? explain in each case.a. two countries can achieve gains from trade even

Assume the following about mushroom kingdom there are 16869 : assume the following about mushroom kingdom there are 16869 gold coins in circulation nominal gdp is 86722 gold coins

Megamart plc is a medium sized retailer of fashion goods : megamart plc is a medium sized retailer of fashion goods with some 200 outlets spread throughout the uk. a publicly

Drink tax the weekly supply qsp and demand qdp of beer in a : drink tax the weekly supply qsp and demand qdp of beer in a city are given by qsp p qdp6.2 - .55p where p is the price

You are a division manager at toyota if your marketing : you are a division manager at toyota. if your marketing department estimates that the semiannual demand for the

Crew brew of wisconsin plans to build a microbrewery on a : crew brew of wisconsin plans to build a microbrewery on a small stream in that state. after sampling water from the

Hrry and sally have the following preferencesuhx y lnx : harry and sally have the following preferencesuhx y lnx lnyusx y lnx ya. what is harrys price elasticity of demand

John wang is a junior partner and training manager at : john wang is a junior partner and training manager at miller dundas a medium sized firm of auditors. he oversees the

User Account

All Pages