Suppose that a market is described by the following supply and demand equations: QS = 2P QD = 180-P The equilibrium price in this market is $, and the equilibrium quantity is units. Suppose that a tax of T is placed on buyers, so the new demand equation is as follows: QD = 180-(P +T) The new equilibrium price is, and the new equilibrium quantity is. The price received by sellers, the price paid by buyers, and the quantity sold .

Suppose that a market is described by the following supply and demand equations: QS = 2P QD = 180-P The equilibrium price in this market is $, and the equilibrium quantity is units. Suppose that a tax of T is placed on buyers, so the new demand equation is as follows: QD = 180-(P +T) The new equilibrium price is, and the new equilibrium quantity is. The price received by sellers, the price paid by buyers, and the quantity sold .

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 10PA

See similar textbooks

Similar questions

What is consumer surplus? How is it illustrated on a demand and supply diagram?
What is the relationship between quantity Demanded and quantity supplied at equilibrium? What is the relationship when there is a shortage? What is the relationship when them is a surplus?
What is the relationship between total surplus and economic efficiency?
What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?
Explain why the following statement is false: In the goods market, no buyer would be willing to pay more than me equilibrium price.
Suppose you are given the following information: Qs = 100 + 3P Qd = 400 – 2P where Qsis the quantity supplied, Qdis the quantity demanded and P is price. 1. Now suppose that a tax is placed on buyers so that Qd = 400 – (2P + T) where T istaxes. If T = 15, solve for the new equilibrium price and quantity. (Note: You aresolving for the equilibrium price for sellers and buyers)
The demand and supply equations for a product are: Q^d=300-6p and Q^x=-40+6p. . Determine the market Equilibrium and draw graphs. Suppose that the government decides to impose a flat tax of 10% on each unit sold. Show that the price that consumers pay would be the same if the government imposed a tax of Rs. 1.70 per unit sold. Draw graph and explain . Also calculate the total revenue earned by sellers before and after the tax, the tax revenue raised by the government, changes in consumer and producers surplus and dead weight loss
Suppose that demand for gasoline is 0.5 (Ed=0.5) and the supply of gasoline pizza is 1.25 (E, = 1.25). If the government imposes a $1 per gallon excise tax on the production of gasoline, then the price that consumers pay will and the price that producers receive will O increase by more than $0.50; decrease by more than $0.50. O increase by more than $0.50, but less than $1; increase by more than $0.50, but less than $1. increase by more than $0.50, but less than $1; decrease by less than $0.50. decrease by more than $0.50, but less than $1; increase by less than $0.50. increase by less than $0.50; decrease by more than $0.50, but less than $1.
Refer to the graph shown. Assume the market is initially in equilibrium at point j in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from SO to S1. The effect of the tax is to raise equilibrium price from: Price a 404 Od to b. Od to c. Oc to b. e to c. Ja ------ HETERMINA HH -------I k $1 SO Demand Quantity
Suppose that in a certain market the demand function for a product is given by p =−8q + 2800 and the supply function is given by p = 3q + 45. Then a tax of $5 per itemis levied on the supplier, who passes it on to the consumer as a price increase. Findthe equilibrium price and quantity after the tax is levied.
The demand for gasoline is P= 4 – 0.002Q and the supply is P= 0.4 + 0.004Q, where Pis in dollars and Qis in gallons. Instructions: Round your answer to the nearest penny (2 decimal places). If a tax of $0.8/gallon is placed on petrol, what is the incidence of the tax? Tax incidence to the consumer: $ Tax incidence to the supplier: $ Instructions: Round your answers to the nearest whole number. What is the lost consumer surplus? $1 What is the lost producer surplus? 24
The market for skateboards currently has no taxes. The equilibrium quantity is 5,000/month, and the equilibrium price is $40. The governor is considering placing a $10/skateboard tax on skateboard producers, and expects to raise $50,o00/month in revenue. Is the governor correct? O Yes, because producer and consumer responses will cancel out. O No, because the quantity produced and consumed will fall below 5,000/month once the tax is imposed. O No, because it doesn't matter whether the consumer or producer is taxed. O Yes, because 5,000 x $1O = $50,000.