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

Why marketers are interested in discretionary income, Because discretionary...

Because discretionary Income = the money people have left over once they have paid for all of their basic needs (Food, Clothing, Shelter). You could also call it Disposable Inc

Marginal cost curves, Marginal cost curves generally slope: a) downward ...

Marginal cost curves generally slope: a) downward because of decreasing opportunity cost b) upward because of decreasing opportunity cost c) downward because of increasing opp

Labour market, use a graph of the classical labour market to illustrate the...

use a graph of the classical labour market to illustrate the effects of a real wage existing in the market that is lower thhan the equilibrium real wage

General principles of marginal and average total cost curves, What are the ...

What are the general principles about marginal and average total cost curves? General principles which are always true concerning a firm’s marginal and average total cost curve

Fiscal policy in the School of rational expectations, I want a Fiscal polic...

I want a Fiscal policy in the School of rational expectations.

International trade, what does international trade fails to its claims ?

what does international trade fails to its claims ?

Define elasticity of supply, Define elasticity of supply. What factors infl...

Define elasticity of supply. What factors influence Elasticity of Supply? There is only one type of identifiable elasticity of supply measuring the responsiveness of market sup

Credit multiplier, compute: credit multiplier, maximum change in the money ...

compute: credit multiplier, maximum change in the money supply

Money market in the AS-AD model, Q. Money market in the AS-AD model? g...

Q. Money market in the AS-AD model? goods and the money market in the AS-AD model We begin by studying goods market and money market when prices are no longer constant. Fi

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