The demand curve for tea is Q = 250 – 10P in Canada. Q is quantity in millions of pounds and P is the market price per pound of tea. Suppose that Canada is importing all of its tea demanded. Foreign producers can ship tea to Canadian distributors at a constant marginal (= average) cost of $8 per pound, and Canadian distributors can in turn distribute tea for a constant $2 per pound. The Canadian tea market is competitive. Government is considering to impose a tariff on tea imports of $2 per pound. Does the tariff result in net gain or a net loss to society as a whole?

In the free-market equilibrium of a perfectly competitive market, the price of the good is 90 dollars and the elasticity of demand and the elasticity of supply values are respectively Ed* = -6.6 and Es* = 4.1 Suppose the government imposes a per-unit tax equal to 10.4 payable by consumers. Calculate the estimate of the price firms charge consumers in the tax equilibrium using the elasticity values provided above. Then enter that price value below.

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Consider the market for bicycles in the fictional province of Westvale. The market demand function for bicycles is given by P=300-2Q. The marginal cost curve for firms in this market is given by P=40+Q. Prices are measured in dollars.    a) Under a competitive market equilibrium, what is the price of a bicycle?  b) How many bicycles are produced under a competitive market equilibrium?  c) Calculate consumer surplus, producer surplus, and total surplus under the competitive market equilibrium    Suppose that the firms that were once competing in this market merge into one single firm, forming a monopoly. This monopoly has a marginal revenue function of P=300-4Q. d) What price does this monopolist charge?  e) How many bicycles does the monopolist produce?  f) Calculate consumer surplus, producer surplus, and total surplus under the monopolistic market outcome  g) How much deadweight loss resulted from the creation of the monopolist?