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

Explain the economy automatic stabiliser, Explain the economy automatic sta...

Explain the economy automatic stabiliser A budget deficit is shortfall between a government's tax revenue and its spending in a given year. If a government runs a budget defici

Explain the classical growth theory, Q. Explain the classical growth theory...

Q. Explain the classical growth theory? Production function won't provide us with a theory or explanation of growth. It's only a convenient tool that helps us breaking down gro

Difference among federal income tax and a federal sales, How could utility ...

How could utility theory help us understand the difference between a federal income tax and a federal sales tax on consumer consumption patterns?

Determination of all the variables in the classical model, The below diagra...

The below diagram demonstrates how all the variables are determined in classical model:  Figure: Determination of all the variables in the classical model a) Start at

Fiscal Policy, What are the effects of the fiscal stimulus on the macroecon...

What are the effects of the fiscal stimulus on the macroeconomy

Upper bound of the confidence interval, A stock investor would like to have...

A stock investor would like to have an idea concerning the average return of stocks that are traded on a certain exchange. In a sample of 99 stocks, the average return was 9 percen

What is the price elasticity of demand, Consider the following utility func...

Consider the following utility function: U = X 1 X 2 Where X 1 and X 2 are quantities consumed of two goods. You are considering the actions of a consumer that maxi

GDP, HOW MARRIAGE AFFECTS GDP

HOW MARRIAGE AFFECTS GDP

Calculate tax equilibrium quantity, 1. Consider two projects.  The fir...

1. Consider two projects.  The first project pays benefits of $90 today and nothing else.  The second project pays nothing today, nothing one year from now, but $100 two

Granger causality, With the aim of this project to observe the impact of oi...

With the aim of this project to observe the impact of oil price shocks on macroeconomic indicators, testing for causality between these variables will establish whether or not, oil

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