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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1. The Reinheitsgebot is a set of laws established in the 1500s that regulate the production and sale of beer in Germany. Among its provisions, the edict set maximum prices that brewers could charge at various times of the year: During Oktoberfest, the price for one [Bavarian Liter] is not to exceed one Pfennig (Penny, Munich value). Suppose that the demand for beer is given by $QD = 6000-1600P, and the supply of beer is given by QS = -1000+2000P. a) If a 1-Pfennig price ceiling is imposed, does the price ceiling make society better off? Does it make beer producers better off? Does it make beer drinkers better off?
(Figure: The Market for Season Passes to Amusement Parks) Use Figure: The Market for Season Passes to Amusement Parks. Suppose with no tax the equilibrium price is $110 and the equilibrium quantity is 250. If the government levies a tax of $30 per season pass purchased, the new equilibrium price will be and the new equilibrium quantity will be Price (per pass) S3 S₂ S₁ So $140 130 120 110 100 0 O $130; 150 O $110; 250 O $140; 100 O $120; 200 100 150 200 D 250 300 Quantity (per week) 7
Based on the graph, the resulting consumer and producer surplus at a price of $25 are, respectively, 50 45 40 35 30 25 20 15 10 + 5 Price $4,000 and $4,000. $9,000 and $4,000. O $2,000 and $4,000. S 100 200 300 400 500 600 700 800 Quantity to D -2°C
D Question 7 In the graph, producer surplus is equal to 22 16 D 20 $60 $140 $200 $280 Question 8 21
a) Calculate consumer surplus and producer surplus at the equilibrium. b) Calculate the loss in producer surplus of the price fall to $12, due to Some producers leave the market. The remaining producers sell their product at the lower price. Price Supply 24 + A 22 20 18 F 16 14 12 Demand 10 + 8 + 6+ 2+ + + + 1 2 3 4 7 8 9 10 11 Buaxtity
12
Blood oranges P (euros ton) 1,000 500 700 Q (metric tons) Blood oranges are a tasty fruit with a red-colored flesh. The Italian government subsidizes the production of blood oranges by supporting their price. If the market for blood oranges from Italy is as shown in the graph above, how much does the subsidy cost the government and, ultimately, Italian taxpayers? Select one: O a. 700,000 euros O b. 500,000 euros O c. 1 million euros O d. 200,000 euros Check Next page s page MacBook Pro
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