The market for tomatoes is competitive and characterized by a demand function of the formQD = 60000 - 4000p and a supply function of the form Qs = 6000p -30000, where quantity is measured in kilogramsand p is the price per kilogram.%3DSuppose the government starts to charge sales tax on tomatoes. The tax is at 5% for every dollar a consumer spendsonon tomatoes.1. Calculate the equilibrium prices and quantity under the value tax2. Calculate the government tax revenue, and the deadweight loss of the tax.

We are going to answer this question using tax burden concept to answer this question.

The market for tomatoes is competitive and characterized by a demand function of the form Qp = 60000 - 4000p and a supply function of the form Qs = 6000p -30000, where quantity is measured in kilograms and p is the price per kilogram. Suppose the government starts to charge sales tax on tomatoes. The tax is at 5% for every dollar a consumer spends on tomatoes. 1. Calculate the equilibrium prices and quantity under the value tax 2. Calculate the government tax revenue, and the deadweight loss of the tax.

The market for tomatoes is competitive and characterized by a demand function of the form Qp = 60000 - 4000p and a supply function of the form Qs = 6000p -30000, where quantity is measured in kilograms and p is the price per kilogram. Suppose the government starts to charge sales tax on tomatoes. The tax is at 5% for every dollar a consumer spends on tomatoes. 1. Calculate the equilibrium prices and quantity under the value tax 2. Calculate the government tax revenue, and the deadweight loss of the tax.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter4: Markets In Action

Section: Chapter Questions

Problem 1SQP

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