In order to partially address the problem of obesity

Assignment Help Business Economics

Reference no: EM131161208

In order to partially address the problem of obesity, suppose that the U.S. government is considering a tax on chocolate! Assume that before the tax, the market for chocolate is perfectly competitive and can be represented by: QD = 5000 – 25P, and QS = 200P – 50.

a. What is the market equilibrium price and quantity?

b. Assume that the government imposes a $5 per unit tax. What is the new equilibrium quantity? What price do the suppliers receive in equilibrium? What price do the consumers pay in equilibrium?

c. What is the tax revenue that the government receives? What is the tax burden for consumers (in dollars)? What is the tax burden for producers (in dollars)?

d. In this price range, which party (consumers or producers) has the more elastic price elasticity? Explain your answer.

e. Show the tax burdens for consumers and producers in a graph, including the before and after tax equilibriums.

Reference no: EM131161208

Questions Cloud

Evaluate apple effectiveness at customer satisfaction : Evaluate Apple's effectiveness at customer satisfaction, loyalty and empowerment. What efforts is it making? What tools is it using? How is it handing complaint management? What strategies would you suggest?

Determine the expected rate of return on jones stock : Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return ..

Many statistics indicating that healthcare costs : You have seen the many statistics indicating that healthcare costs are rising and continue to rise. Many of you have probably felt this first hand, by way of increases in premiums for your health insurance and/or the increase in patient responsibilit..

Create a print ad and a video broadcast for the product : Create a print ad and a video broadcast for the product featuring your new strategy (Youtube TM, video, or power point storyboard is acceptable)

In order to partially address the problem of obesity : In order to partially address the problem of obesity, suppose that the U.S. government is considering a tax on chocolate! Assume that before the tax, the market for chocolate is perfectly competitive and can be represented by: QD = 5000 – 25P, and QS..

Domestic currency appreciates against foreign? currency : Everything else? equal, when domestic currency appreciates against a foreign? currency: A. the nominal exchange rate goes up. B. there is no change in the real exchange rate. C. there is no change in the nominal exchange rate. D. the nominal exchange..

Perfectly competitive constant-cost industry : A perfectly competitive constant-cost industry has a large number of potential entrants. Assume that each firm minimizes its LRAC at an output of 20 units and at an average cost of $10/unit. Market demand is given by QD = 1500 – 50P. How many firms p..

What is the total cost savings can be realized : Company A, a low rated firm, desires a fixed rate, long term loan. Company A currently has access to floating-rate funds at a margin of 1.2% over LIBOR. Its direct borrowing cost is 13% in the fixed rate bond market. What’s the total cost savings can..

Devaluation of the greek drachma : Following a devaluation of the Greek drachma, which of the following products sold in Greece is most likely to bear a drachma price increase? IBM mainframe computer, whose only competition comes from other American computer companies.

User Account

All Pages