Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon of gasoline sold. Suppose they decided to impose the tax on producers. In the following graph, shows the effect of a $0.50 tax on each gallon of gasoline sold imposed on producers by shifting the demand or supply curve. Price of Gasoine (Dollars per gallon) 30 2.5 20 Supply Demand O- Demand 161 Supply

Tips ips 3. Individual and market demand Suppose that Carlos and Deborah represent the only two consumers of iced coffee in some hypothetical market. The following table presents their monthly demand schedules for iced coffee: Price (Dollars per cup) 1 2 3 ss W 4 5 Carlos's Quantity Demanded Deborah's Quantity Demanded. (Cups) (Cups) 8 16 5 12 3 8 4 2 1 0

12. Market equilibrlum and disequilibrlum The following graph shows the monthly demand and supply curves in the market for keyboards. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Keyboards 60 I Price (Dollars per keyboard) 54 18 Supply 48 Quantity Supplied (Keyboards) 420 Quantity Demanded 1,000 42 (Keyboards) 36 30 Demand 24 18 12 6. 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Keyboards) keyboards bought and sold per month. per keyboard, and the equilibrium quantity is The equilibrium price in this market isS PRICE (Dollars per keyboard)

4. In order to reduce farm output, raise farm prices, and thus raise farm incomes (revenues), the government pays farmers to set aside a portion of their land from production. Using a graph, explain in terms of the elasticity of demand for farm products why farmers may be better-off when harvests are low even if we ignore the money they receive from the set-aside program.

3. Individual and market demand Suppose that Hubert and Kate are the only consumers of pizza slices in a particular market. The following table shows their weekly demand schedules: Price (Dollars per slice) 1 2 3 4 5 Hubert's Quantity Demanded (Slices) 8 5 3 1 0 Kate's Quantity Demanded (Slices) 16 12 8 4 2 On the following graph, plot Hubert's demand for pizza slices using the green points (triangle symbol). Next, plot Kate's demand for pizza slices using the purple points (diamond symbol). Finally, plot the market demand for pizza slices using the blue points (circle symbol). Note: Line segments will automatically connect the points. Remember to plot from left to right.

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8. Suppose we want regular cars to be gradually replaced by electric cars. There are several kinds of government interventions that could be used to make this happen, or at least to push the car market to produce and sell more electric cars. Explain how a tax could be used for this purpose, and then explain how a subsidy could be used for this purpose.

o Suppose the Canadian government has decided to place an excise tax of $20 per tire on producers of automobile tires. Excise taxes are also called sales or commodity taxes. Previously, there was no excise tax on automobile tires. As a result of the excise tax, producers of tires, such as Bridgestone and Michelin, are going to alter their tire prices. The graph illustrates the demand and supply curves for automobile tires before the excise tax. Please shift the appropriate curve or curves on the graph to demonstrate the impact of the new tax. What is the price consumers pay for a tire post tax? Round to the nearest 10. price paid by consumers: $ What is the price producers receive for a tire net of taxes? Round to the nearest 10. Price 150 140 130 120 110 100 90 80 70 60 50 O 1 2 3 01 4 5 Quantity 6 Supply Demad 7 8 9 10

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Above is the supply and demand graph in a market. Answer the following questions based on the graph: 3.1. What are the equilibrium price and quantity in the market?  3.2. What are the quantity supplied, quantity demanded, and price at a shortage of 400 units?  3.3. Whar are the quantity supplied, quantity demanded, and price at a surplus of 200 units?