5. At present, the price of $10, a football in the US and 5 million are sold annually. Market demand has shown that the demand curves are linear, and that price elasticity of market demand is -4.0 and the price elasticity of supply is +2.0. a) Calculate the demand and supply curves for footballs in the US. b) The US government imposes a $3 tax on every football sold in the country. How much revenue will the tax raise, and how much will the tax effect consumer surplus and producer surplus?
5. At present, the price of $10, a football in the US and 5 million are sold annually. Market demand has shown that the demand curves are linear, and that price elasticity of market demand is -4.0 and the price elasticity of supply is +2.0. a) Calculate the demand and supply curves for footballs in the US. b) The US government imposes a $3 tax on every football sold in the country. How much revenue will the tax raise, and how much will the tax effect consumer surplus and producer surplus?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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