ECON 1 Lecture Notes - Lecture 13: Shortage, Demand Curve

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29 Oct 2018

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Tax on the sale of a good. Sellers pay tax of if they sell a bushel. Tax of per unit levied on sellers. Before tax is levied, buyers pay . After tax is levied, buyers pay . How much of the tax is passed forward to buyers? () How much of the tax is borne by sellers? () Sellers receive the same price as before, supply the same. Buyers pay tax of if they sell a bushel. Comparing a tax on buyers with a tax on sellers. Net price to sellers = - = . Net price to buyers = + = . In this case, doesn"t matter whether tax is levied on buyers or sellers. T is the tax ps + t pd ps pd. 200 - 0. 7 100 + 0. 3 + 10 ps + t q = pd q. = 127 ps pd ps ps + t pd + t.

Related Questions

1. Assume S(P-)=50+P- D(P+)=370-3P+

Sales tax of 20%

Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.

2. Assume S(P-)=50+3P- D(P+)=370-P+

Sales tax of 20%

Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.

3. Explain how you answer for question 1 and 2 illustrate the principle that the less responsive side of the market (with a smaller price coefficient) will pay more than half the total cost of a sales tax.

4. Draw diagrams of question 1 and 2 and explain how they illustrate your answer to question 3.
[Hint: Be careful about drawing the relative slopes of the supply and demand functions.]

5. Suppose the government sets a controlled price below the market clearing price for a commodity. Draw a diagram and use the idea of a maximum buying price to explain whether the total price paid by the buyers will end up lower or higher than before.

Could someone help me with number 3,4, and 5? Please and thank you!!

crimsonchinchilla729

The demand for ice cream is given by Q D = 20 - 2P, measured in gallons of ice cream. The supply of ice cream is given by Q S = 4P - 10. Suppose that the government legislates a $1 tax on a gallon of ice cream, to be collected from the seller.

a) As a result of the tax, what is the price paid by buyers?

b) What is the price received by sellers?

Hint: You need to determine the consumer and producer burden of the tax. First, find the equilibrium price and quantity. Then, determine the elasticity of demand and supply. Then, use the share of the tax formula provided to you to determine the burdens. After, that you add the consumer burden to the equilibrium price to find the buyer price. Subtract the producer burden from equilibrium price to find seller price.

olivemoose752

1. In the formula for Bayes theorem if the w-probability is greater than the zero than the a-probably is less than the b-probability

2. posted offer markets with at least two sellers will generate prices that remain a little above prices from double auction markets

3. running the price clock in a dutch auction once will produce higher observed prices compared to running the clock twice

4. if losers pay winners in a sealed bid auction then they will eventually be willing to bid up to 75 percent more than the winning prize

5. with only one seller in a posted offer market prices willl tend to move upward toward the monopoly price

6. adjusting the concentration of sweet versus sour enabled rats to have a large negative income effect for sour water

7. a sales tax on large luxury boats will impact the buyers more than the sellers of these boats causing the buyers to pay more than half the cost of the sales tax

8. if each seller knew all of the sellers unit costs and the buyers knew all of the buyers unit values a buyer or seller would be able to calculate the competitive equilibrium price before an experiment began

9. suppose your income taxes rise only on incomes over 250,000 annualkly then your after tax income will be unafftected if your annual income is 100,000

Short Essay Questions

1. Recall the loser pay winner auction experiment done in class.

a. Discuss how these experiments explain why the bidder changed their minds toward wanting to bid well above the value of the prize, even though they refused to do so at the beginning

b. Discuss how the experiment explains why George Bush and many citizens changed their minds about a

ECON 1 Lecture Notes - Lecture 13: Shortage, Demand Curve

ECON 1 Full Course Notes

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