EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 10, Problem 4RQ
To determine
The imposition of tax involves an excess burden is to be shown with the general equilibrium diagram.
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Suppose Swaziland is considered to be a small country. In 2022, the South African producers increased their export of cars by 100 per cent. To protect the Swaziland domestic car industry, the Swaziland government imposed an import tariff of 10% per vehicle imported.Use the partial equilibrium analysis to illustrate the effects of the protective import tariff on the Swaziland Economy. Draw a diagram or graph to support
The imposition of a tax involves an “excess burden.” How would you show a similar result with a general equilibrium diagram (Note: With the general equilibrium diagram, you must be more precise about how tax revenue is used.)
a) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4.
Suppose 60 TL tax is imposed on each unit of X that is purchased.
What is the burden of the tax? Explain the key factors that determine the incidence of the tax.
b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.
Chapter 10 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 10.2 - Prob. 1MQCh. 10.4 - Prob. 1MQCh. 10.4 - Prob. 2MQCh. 10.4 - Prob. 1.1MQCh. 10.5 - Prob. 1TTACh. 10.5 - Prob. 2TTACh. 10.7 - Prob. 1MQCh. 10.7 - Prob. 2MQCh. 10.7 - Prob. 3MQCh. 10.8 - Prob. 1TTA
Ch. 10.8 - Prob. 2TTACh. 10.8 - Prob. 1MQCh. 10.8 - Prob. 2MQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQCh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Prob. 10.7PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10P
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- a) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4. Suppose 60 TL tax is imposed on each unit ofX that is purchased. What is the burden of the tax? Explain the key factors that determine the incidence of the tax. b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.arrow_forwardConsider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $110 where the quantity demanded is 90 (thousand CD players per month). If the price of CD players falls to $50, demand will increase to thousand CD players per month. (Enter your response using an integer.) of this increase, thousand units of the 90 thousand-unit increase is the pure price effect and thousand units of the increase is the bandwagon effect. The bandwagon effect causes the demand for CD players to be more otherwise be the case (without network externalities). ▼than would 200- 180 160 Demand 140 120- 100- 80- 60- 40- 20- 0+ 0 Deo 20 D150 D80 P120 P180 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month) Q Nextarrow_forwardConsider two substitute products; movies and Box Office rentals. With the aid of graphical illustrations, explain why the outcome of a general equilibrium analysis can differ substantially from that of a partial equilibrium analysis, when evaluating the impact of a unit tax on movie tickets.arrow_forward
- Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $90 where the quantity demanded is 120 (thousand CD players per month). If the price of CD players falls to $50, demand will increase to 180 thousand CD players per month. (Enter your response using an integer.) Of this increase, price effect and thousand units of the 60 thousand-unit increase is the pure thousand units of the increase is the bandwagon effect. C Price 200- 180- 160- 140- 120+ 100- 80- 60- 40- 20- 0+ 0 Doo Demand 20 P150 D60 P120 180 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month)arrow_forwardUsing the appropriate diagram(s), explain briefly why the third general equilibrium efficiency condition (i.e. MRSxy = MRPTxy, where x and y are any two products), that connects consumption and production, must hold.arrow_forwardiii) Define "Free Good" in a general equilibrium framework. Explain whether the goods are free goods in the following context after determining the equilibrium price. Consider an exchange economy. There are two consumers A and B and two goods X and Y. A has lexicographic preference over good X and B also has the same type of preference. Their endowment is (5,5) each.arrow_forward
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