Suppose the government imposes a $10 per unit tax on a good (see diagram below) causing buyers to pay $18 for the item compared with an original equilibrium price of $12. What is the tax revenue the government collects from the sale of this item? Price 24 22 20 A 18 Supply 16 14- 12 10- H 6. 4 K M Demand 2. 369 12 15 18 21 24 27 30 33 36 39 Quantity $100 $80 O $120 O$60 +++

Suppose the government imposes a $10 per unit tax on a good (see diagram below) causing buyers to pay $18 for the item compared with an original equilibrium price of $12. What is the tax revenue the government collects from the sale of this item? Price 24 22 20 A 18 Supply 16 14- 12 10- H 6. 4 K M Demand 2. 369 12 15 18 21 24 27 30 33 36 39 Quantity $100 $80 O $120 O$60 +++

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price 27.5 CHOKRESE DEDELS 85 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 Supply Demand 5 10 15 20 25 30 35 40 45 50 55 60 65 70 Quantity Refer to the figure. When the price falls from $45 to $35, consumer surplus increases by $100 from new consumers entering the market. O increases by $50 from new consumers entering the market. increases by $50 from consumers who were already buying the good now paying a lower price. decreases by $50 from consumers who were already buying the good now paying a lower price.
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S1 10 SO 8. Demand 0 10 20 30 40 50 60 70 80 90 100 Q Suppose that the market is initially at an equilibrium price of $6 and an equilibrium quantity of 40 units in the graph above. If the government decides to add a $2 per-únit tax on this good, the deadweight loss from the tax will be: 80 70 60 O 10 46676 5432 10
110- 100+ 90 80 70+- 60+ 0 5 40 30 Price Demand 20+ 10+ "* 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 Quantity 50 45 . Supply Refer to the above figure. The efficient price is O $80, and the efficient quantity is 50. O $70, and the efficient quantity is 60. O $70, and the efficient quantity is 100. O $50, and the efficient quantity is 60.
Refer to the figure below: 12 11 10 Supply 6. 3 Demand s 10 15 20 25 30 35 40 45 If a tax of $3 is levied on this good, what is the producer surplus after tax? $112.5 $22.5 $45
Price 68 64 60 56 Supply 52 48 44 40 36 32 28 24 20 16 12 8. Demand 1 23 4 56 7 89 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Quantity Refer to the Figure. If the government imposes a price ceiling of $48 in this market, then total surplus will be а. $80. b. $480. O c. $240. O d. $320.
Assume that the market for house cleaning in Richmond is free and competitive, without taxes or externalities and that daily 2,000 housing units are cleaned. p* D Q* Q Q* Q Your friend suggests that it would be more efficient if less house cleaning took place in Richmond, say 1,500. (S)he argues that the less is cleaned, the greater the total surplus. Do you agree? O a. Hard to say. If demand is really elastic, then maybe. O b. Yes. Less cost is always more efficient. Oc No. If output is lower than equilibrium output, marginal social cost> marginal social benefit, resulting in DWL of underproduction. O d. No. If output is lower than equilibrium output, marginal social cost marginal social benefit. resulting in DWL of underproduction. O e. None of the answers offered are accurate.
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Figure 4-4 Price (dollars per pound) $9 6 3 4,000 8,000 12,000 Supply Demand Quantity (pounds) Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 4,000 pounds of pecans are sold, O consumer surplus equals zero. O the marginal benefit of each of the 4,000 pounds of pecans equals $3. O the deadweight loss is equal to $12,000. O marginal benefit is equal to marginal cost.
1. Here is the demand for coconuts: P 3 4 5 6 7 8 9 11 13 16 20 QD 1100 1000 900 800 700 600 500 400 300 200 100 And here is supply P 3 4 5 6 7 8 9 10 11 12 13 QS 100 200 300 400 500 600 700 800 900 1000 1100 Identify the equilibrium price, quantity, consumer and producer surplus and show them on a graph. The graph should be pretty simple here, the main issue is finding the numbers for consumer and producer surplus.
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