Soft drink producer's operation in each week produces q liters of mineral water at a cost of aq) = 2000 + 5q+ 0.001q dollars, selling its output at $15 a liter. The government decides to levy a tax of r dollars a liter on the producer's output, knowing that the producer will adjust the output to maximize its profit with respect to changed situations. . What is the government's maximum tax revenue T= rq , and at what tax rate is achieved (? p. b) Investigate the relationship between producer's maximum profit change and tax ? . C) discuss the situation. %3D

Soft drink producer's operation in each week produces q liters of mineral water at a cost of aq) = 2000 + 5q+ 0.001q dollars, selling its output at $15 a liter. The government decides to levy a tax of r dollars a liter on the producer's output, knowing that the producer will adjust the output to maximize its profit with respect to changed situations. . What is the government's maximum tax revenue T= rq , and at what tax rate is achieved (? p. b) Investigate the relationship between producer's maximum profit change and tax ? . C) discuss the situation. %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the tax is imposed on the sellers, shouldn't the 'T' be used alongside the supply 'q' not the demand 'q'? So would it not be q=b(p-T)-a?
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7.7 pleaase explain
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The annual demand for liquor in a certain state is given by the following equation: QD=500.000-20.000P where Pis the price per gallon and QD is the quantity of gallons demanded per year. The supply of liquor is given by the equation Qs=30.000P. Now assume that a unit tax of 1$ is levied on the sellers of the commodity (i.e. statutory incidence is on the producers). (e) What is the government's tax revenue? (f) Determine how much of the total tax is actually paid by th (g) Determine how much of this total tax is actually paid by t (h) Compute the social welfare loss(i.e., dead-weight loss) tax.
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1) Describe in detail how taxes impact consumer and producer surplus. In your discussion, also show graphically, the before and after-tax impact.
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