ECO100Y1 Lecture Notes - Lecture 4: Allocative Efficiency, Economic Surplus, Demand Curve

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fuchsiafox414

17 Apr 2018

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Applications of demand and supply; consumer demand theory. The government eliminates the tax on a carton of cigarettes. The tax on cigarettes is paid by sellers. A 15 percent tax imposed on the sellers of accounting, economics, business and chemistry textbooks resulted in the following price increases. The supply curves for all of these goods have the usual positive slope. Four consumers are willing to pay the following amounts for haircuts: Mike: elizabeth: britney: dmitry: . Firm a: firm b: firm c: firm d: . Answer true, false or uncertain and explain your answer. When the price of apples is . 20 a unit, robin does not buy any. What is the money value of robin s consumer surplus each week when the price of apples is. sh. 50 a unit? (a) . 05 (b) sh. 80 (c) sh. 70 (d) sh. 50 (e) none of the above.

Related Questions

The market for packets of cigarettes has been described by the following supply and demand functions:

Supply: P = 10 + 4Q Demand: P = 100 - 5Q where P is the price in dollars and Q is the quantity of packets of cigarettes per month (in thousands).

Part A) Construct a graph of supply and demand for this market showing all intercepts. What are the equilibrium prices and quantities? Show these on your graph.

Part B) At the market equilibrium price, what would be the total monthly revenue?

Part C) Calculate consumer surplus at the market equilibrium and indicate this surplus as an area on your diagram.

Part D) Calculate producer surplus at the market equilibrium and indicate this surplus as an area on your diagram.

Part E) Assume that a per-unit tax of $9.00 per packet of cigarettes is imposed by the government on the suppliers of cigarettes. Depict this on your demand and supply diagram. (Hint: the new tax inclusive supply function will be: P = 19 + 4Q). What is the new market equilibrium quantity? What price will consumers now pay and what price will suppliers now receive?

Part F) How much is the government revenue from the tax on suppliers?

Part G) Calculate consumer surplus and producer surplus after the imposition of the tax and any deadweight loss associated with the tax. Indicate these surplus and tax revenue areas on your diagram. Explain what the deadweight loss represents.

Part H) Now assume that instead of imposing a per-unit tax of $9.00 per pack on the suppliers of cigarettes the government decides to apply the same per-unit tax of $9.00 on consumers. Depict this on your demand and supply diagram. (Hint: the new tax inclusive demand function will be: P = 91 - 5Q) What is the new market equilibrium quantity? What price will consumers now pay and what price will suppliers now receive? (5 marks)

Part I) How much is the government revenue from the tax on consumers? (1 mark)

Part J) Who bears the greatest burden of the tax in each case, producers or consumers? Does your answer depend on whether the tax is levied on producers or consumers?

I am really having difficulty understanding Part J - can that please be answered with some detail?

carminewildebeest911

predict the direction of the change for either supply or demand in the following situations:

a. serveral new compaines enter the cell phone industry.

b. consumers suddenly decide SUVs are unfashionable .

c. the u.s sugeron general issues a report stating that tomatoes prevent colds.

d. Frost threatens to damage the coffee crop, and consumers expect the price to rise sharply in the furture.

e. the price of tea falls, what is the effect on the coffee market?

f. the price of sugar rises. what is the effect on the coffee market?

g.Tobacco lobbyists convince Congress to remove the tax paid by sellers on each carton of cigarettes sold.

h. A new type of robot is invented that will pick peaches

i. Nintendo anticipates that the furture price of it games will fall much lower than the current price.

book economic for today by Irvin B Tucker ISBN #9781305507074

Thank you for your help.

CHapter 3 problem #4

thank for your help.

Suppose that a market is described by the following supply and demand equations:

QS= 2P

QD = 300P

a. Solve for the equilibrium price and the equilibrium quantity.

b. Suppose that a tax of T is placed on buyers so the new demand equation is QD = 300 (PT). Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold?

c. Tax revenue is T×Q. Use your answer to part (b) to solve for tax revenue as a function of T.
d. The deadweight loss of a tax is the area of the triangle between the supply and demand curves. Recalling that the area of a triangle is , solve for deadweight loss as a function of T.

(Hint: Looking sideways, the base of the deadweight loss triangle is T, and the height is the difference between the quantity sold with the tax and the quantity sold without the tax.)

yellowmule81

ECO100Y1 Lecture Notes - Lecture 4: Allocative Efficiency, Economic Surplus, Demand Curve

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