ECON 1P91 Lecture Notes - Lecture 7: Demand Curve, Fax, Bumper Crop

• School: Brock University
• Department: Economics
• Course: ECON 1P91
• Professor: Professor Cottrel

Document Summary

P0-ps=76-70 = 6 cents per unit. or 10 cents-4 cents = 6 cents per unit. 10 cents * 20 units = or sh. 10 *20 = . More inelastic the demand with an upward sloping supply, larger portion of tax paid by consumer. *division depends on elasticities of demand and supply. 10 cent tax is now levied on consumer (buyer): new demand curve: *demand curve shifts leftward by vertical distance of the tax. X axis intercepts: when p=0, qd"=55 y axis intercept: when q=0, p"=110. Ps + tax = 70 cents +10 cents =80 cents (pb) Pb-p0=80-76 = 4 cents per unit or 10 cents -6 cents = 4 cents per unit. *supply is perfectly inelastic [fixed qty crops harvested] Supply shifts rightward by vertical distance of subsidy. Size of shift depends on size of subsidy. Pb goes down = $ 0. 25 per liter. Q* goes up = 17000 liters per week.