Homework 5, Macroeconomics

Assignment Help:

Instructions


For the following 10 questions, consider an economy which is initially in equilibrium without a tax, with P* of $90 and Q* of 10. Later, a tax is put on the market that changes the quantity to 5, the price paid by buyers to $120 and the price received by sellers to $70. The supply and demand curves are smooth, straight lines, with the vertical intercept for the demand curve at 150 and the vertical intercept for the supply curve at 50.

1. What is consumer surplus before the tax?

2. What is producer surplus before the tax?

3. What is the amount of the tax (per unit)?

4. What is consumer surplus after the tax?

5. What is producer surplus after the tax?

6. What is the tax incidence for buyers (per unit)? Write your answer in absolute value (regardless if it is an increase or a decrease).

7. What is the tax incidence for sellers (per unit)? Write your answer in absolute value (regardless if it is an increase or a decrease).

8. What is the amount of tax revenue?

9. What is the amount of deadweight loss?

10. Which side of the market is more elastic, from your findings, and what does this imply about the slope of the curve?

A. Demand is more elastic than supply and the demand curve is flatter than the supply curve.
B. Demand is more elastic than supply and the demand curve is steeper than the supply curve.
C. Supply is more elastic than demand and the supply curve is flatter than the demand curve.
D. Supply is more elastic than demand and the supply curve is steeper than the demand curve.

Related Discussions:- Homework 5

Tariffs and non-tariff barriers, Tariffs and Non-tariff Barriers A sig...

Tariffs and Non-tariff Barriers A significant aspect of the trade reforms of the 1990s was the reduction in the then prevailing very high import duties (over 300 percent in so

Substitution and income effects in units, Individual A has UA(XA,YA)=lnXA+2...

Individual A has UA(XA,YA)=lnXA+2YA and has $500. PX=5 and PY =10. (a) Find the optimum. Show that it is indeed the maximum. (b) PX=10. Find the new optimum. (c) Calculate

MEC and MEI, MEC and MEI curvs and their role in economics

MEC and MEI curvs and their role in economics

Public sector, Are there any current subsidy or welfare issues that are bei...

Are there any current subsidy or welfare issues that are being discussed or addressed in parliament or in municipalities

Explain the economic functions of money - a unit of account, Explain the Ec...

Explain the Economic functions of money - A unit of account In a monetary economy, all prices may be expressed in monetary units which everyone may relate to. Without money,

Single nonprofit provider, For a single nonprofit provider, describe an out...

For a single nonprofit provider, describe an output-maximizing model to predict supplier behavior?

Equilibrium quantity price and quantity, Over the past few years there has ...

Over the past few years there has been much concern about falling housing prices, and some policy makers have argued that the government should put a floor under prices so that the

Money, what are the three motives of holding money?

what are the three motives of holding money?

Determine the exchange rate, Determine the exchange rate When a currenc...

Determine the exchange rate When a currency is freely floating, the central bank doesn't have to set monetary policy to alter the external value of the currency unless instruct

MPC, A change in government purchases of goods and services results in a ch...

A change in government purchases of goods and services results in a change in real GDP equal to $200 million. Assume the absence of taxes, international trade, and changes in the a

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd