EC 252 Midterm 2 SA Practice 2. Use the following graph to answer questions A-C: Supply and Demand for Lumber 55 50 45 40 35 30 25 20 15 10 5 35 45 40 50 40 45 55 45 50 60 70 50 55 65 60 70 75 55 65 75 80 70 80 Supply 75 85 Demand 2 Demand 1 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 A) Suppose Demand 1 is the market demand curve. Further, suppose Demand 2 represents the market demand curve when there is a tax imposed on consumers. What is the per unit amount of the tax? What is the share of the burden of the tax? B) What is the total revenue collected by the tax? Will there be a dead weight loss as a result of the tax? If so, how large is it?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
Section: Chapter Questions
Problem 12PA
Question
EC 252 Midterm 2 SA Practice
2. Use the following graph to answer questions A-C:
Supply and Demand for Lumber
55
50
45
40
35
30
25
20
15
10
5
35
45
40
50
40
45
55
45
50
60
70
50
55
65
60
70
75
55
65
75
80
70
80
Supply
75
85
Demand 2 Demand 1
0
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
A) Suppose Demand 1 is the market demand curve. Further, suppose Demand 2 represents the market demand curve
when there is a tax imposed on consumers. What is the per unit amount of the tax? What is the share of the burden of
the tax?
B) What is the total revenue collected by the tax? Will there be a dead weight loss as a result of the tax? If so, how
large is it?
Transcribed Image Text:EC 252 Midterm 2 SA Practice 2. Use the following graph to answer questions A-C: Supply and Demand for Lumber 55 50 45 40 35 30 25 20 15 10 5 35 45 40 50 40 45 55 45 50 60 70 50 55 65 60 70 75 55 65 75 80 70 80 Supply 75 85 Demand 2 Demand 1 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 A) Suppose Demand 1 is the market demand curve. Further, suppose Demand 2 represents the market demand curve when there is a tax imposed on consumers. What is the per unit amount of the tax? What is the share of the burden of the tax? B) What is the total revenue collected by the tax? Will there be a dead weight loss as a result of the tax? If so, how large is it?
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