Assume that the monthly demand for Gala apple in the US is given by q=1200-300p and quantity is in million pounds. The monthly supply of Gala is q= -200+400p for p>$0.5. 1) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. What is the new equilibrium consumer price, producer price and quantity? 2) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. Assume that the retail stores are legally obliged to collect this tax. What is the consumers' share of the tax in cents per unit? What about producers?  3) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. Assume that the retail stores are legally obliged to collect this tax. The new consumer surplus is? What about the new producers surplus?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Assume that the monthly demand for Gala apple in the US is given by q=1200-300p and quantity is in million pounds. The monthly supply of Gala is q= -200+400p for p>$0.5.

1) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. What is the new equilibrium consumer price, producer price and quantity?

2) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. Assume that the retail stores are legally obliged to collect this tax. What is the consumers' share of the tax in cents per unit? What about producers? 

3) Now assume that the government has imposed a quantity tax equal to $0.14 on each pound of apple. Assume that the retail stores are legally obliged to collect this tax. The new consumer surplus is? What about the new producers surplus?

 

 

 
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