Deadweight loss measures the loss of efficiency in a market as a result of government intervention loss in a market to buyers and sellers that is not offset by an increase in government revenue loss in revenue to the government when buyers choose to buy less of the product
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- Considermarketforagoodcharacterizedbythefollowinginverse demand and supply functions: PX = 10 − 2QX and PX = 2 + 2QX.a. Compute the surplus received by consumers and producers.b. Now suppose all manufacturers of this good are to pay a lump tax of $0.10that will be used by the government regulators to defray some of the environmental cost imposed by this good’s production. What will be the new surplus received by consumers and producers?c. Based on your results in part ‘b’ above, how will you evaluate the impact of this tax policy on the society? ExplainSuppose that the demand curve for wheat is Q500 - 10p and that the supply auve is O 10p What are the efects of a subnidy (negative tax) ofs4 per unit paid to produoers on the equlibrium, govemment. subsidy cost, consumer surplus (CS), producer surplus (PS), weifare (W, and deadweight loss (DWL)? Wih the subsidy, the equibrium price is Sand the equilibrium quantity isunits. (Enter your responses as whole numbers) The cost of the subsidy to the govermment is S (Enter your response as a whole number) The change in consumer surplus (ACS) is S (Enter your response as a whole number.) The change in producer surplus (APS) is S Enter your response as a whole number) The change in welttare (AW) is S (Enter your reaponse as a whole number and include a minus sign i necessary Deadweight loss is S (Ender your response as a whole number)O When a per unit tax is imposed on the consumer of the product, identify how the consumer nd producer surplus changes, identify the deadweight loss and the amount of the total tax that vill be received by the government. Price PTax D PE F E P1 I H. K Dmi DMTAX QE QE2 Quantity aibicid eifigoh Consumer Surplus before tax = Producer Surplus before tax Consumer Surplus after tax = a Producer Surplus after tax = dig Total Tax = Deadweight Loss = %3D a,bicifih 7 b.) If the world price level of a product was above the domestic U.S. equilibrium price, diagram if the U.S. would import or export the product? Identify how the consumer surplus and producer
- Suppose the government removes a tax on buyers of a good and levies a tax ofthe same size on sellers of the good. How does this change in tax policy affectthe price that buyers pay sellers for this good, the amount buyers are out ofpocket including the tax, the amount sellers receive net of tax, and the quantityof the good sold?Heip m/ultra/courses/_165411_1/cl/outline lyLab M... W WordCounter 5 Quizlet * Question Completion Status: QUESTION 13 Figure 6-25 1ice 10 Is 6. 4 1 Daftertade 10 20 30 40 50 60 70 80 quantity Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is O a. $5. O b.$2. Oc. $1. O d. $6. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers tvTitle Calculate consumer surplus for a demand curve like the one just describedexcept that the buyers’ reservation prices for each unit are $2 higher thanbefore, as shown in the graph below. Description Calculate consumer surplus for a demand curve like the one just describedexcept that the buyers’ reservation prices for each unit are $2 higher thanbefore, as shown in the graph below.
- a. The market demand and supply functions for VCR movie rentals are:QD=10-0.04P and QS=3.8P+4.Suppose that VCR movie rentals are taxed at $0.25 per unit. Calculate:i. the equilibrium quantity and price, point elasticity of demand in equilibrium andproducer surplus without tax.ii. the revenues generated by the tax, the loss in producer surplus and percentageof the burden of the tax falls on producers?b. Determine the "rule-of-thumb" price when the monopolist has a marginal cost of $25and the price elasticity of demand of -3.0.PDemand QDemand PSupply QSupply $10 0 $1 2 $9 3 $2 4 $8 6 $3 6 $7 9 $4 8 $6 12 $5 10 $5 15 $6 12 $4 18 $7 14 If the Government creates a quota of 6 units to reduce the consumption of the dangerous product, what will the price of the good be in the marketplace? How much deadweight loss is there? How much of the deadweight loss came from the consumers?2. The demand and supply functions of a gcod are given by P = -Qd + 125, 2P = 3Qs + 30. Determine the equilibrium price and quantity. Determine ako the effect on the market equilibrium if the govemment decides to impose a fixed tax of GHC5 on each good Who pays the tax? (p = 81, q = 44, then p = 83, q = 42) 3. If fixed costs are 18, variable costs per unit are 4, and the demand function is P = 24 - 2Q. Obtain an expression for n in terms of Q and hence sketch a graph of n against Q. a) For what values of Q does the firm break even? (q = 1 or 9) b) What is the maximum profi? (n = 32 at q = 5) 4. Given the supply and demand functions P = Q? + 12Q, + 32, P = -Qå - 4Qa + 200, Calculate the equilibrium price and quantiy. (p = 140, q = 6)
- Draw a supply-and-demand diagram with a tax onthe sale of a good. Show the deadweight loss. Showthe tax revenueA technology change shts the inverse eply function from 1+3y to p1+g verse demand is p21- Which of the following statements are te in epubrium 1 Producer surplua inoreases Gtion8 2 Consumer surplus increases 3 Ouantity doubles a None 1 and 2 C 12 and 3 d 1 and 3 Vour aner ie inconect The conect aswer 12 and 3 The government wanta to impose a $3 per unit tax on sugar to reduce sugar consumption. is known that tases wil result in a deadweight los Given the supply function is -3p. which of the folowing inverse demand function will result in the smalest deadweight loss? Guesti9 000 p out a Insufficient information to conclude p-700-24 p-1000-3y TUur answera inconecPrice 24 22 20+ A 18 Supply 16 B 14 C 12 F 10 D H G J 6 4 K M Demand 2+ 3 6 9 12 15 18 21 24 27 30 33 36 39 Quantity Suppose the government imposes a $10 per unit tax on a good with a demand and a supply depicted in the above figure. The Gov. R. is equal to the following area В B+D D+F J+G
