Suppose you have the following information about production levels ofIbs. of caviar and bottles of wine, and the market-clearing prices for eachof the nine allocations:5.CaviarWinePricecaviarPricewineGDPAllocation$50,00050,00050,00050,00050,00050,00050,00050,00050,000$166.67187.50$350.00175.00A90100B80200214.29250.00300.00116.6787.507030060400E5050070.00375.00500.0058.3350.00F40600G30700H20800750.0043.75I109001500.0038.89A. How much wine must be sacrificed to produce 1 more lb. of caviar?B. Is allocation point A efficient? (As in class, prove your conclusion with math)C. Which allocation point is efficient? (As in class, prove your conclusion withmath)D. Suppose government assesses a tax of $40 per bottle of wine, but no tax on caviar.i)what will be the new equilibrium? Why?ii)how much of the tax is forward shifted? Explainiii)how much of the tax is backward shifted? Explain

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Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Allocation Caviar Wine Pricecaviar Pricewine GDP $50,000 50,000 50,000 50,000 50,000 50,000 $350.00 $166.67 187.50 90 100 175.00 200 300 80 214.29 250.00 300.00 70 116.67 60 400 87.50 50 500 70.00 F 40 600 375.00 58.33 ABCDE

Suppose you have the following information about production levels of Ibs. of caviar and bottles of wine, and the market-clearing prices for each of the nine allocations: 5. Allocation Caviar Wine Pricecaviar Pricewine GDP $50,000 50,000 50,000 50,000 50,000 50,000 $350.00 $166.67 187.50 90 100 175.00 200 300 80 214.29 250.00 300.00 70 116.67 60 400 87.50 50 500 70.00 F 40 600 375.00 58.33 ABCDE

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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