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28 Sep 2019
Consider the market for gasoline. In the initial equilibrium, theprice is $3.00 per gallon and the quantity is 100 million gallons.The price elasticity of demand is 0.40, and the price elasticity ofsupply is 1.0. Suppose a carbon tax shifts the supply curve upwardby $0.30 and to the left by 20 percent.
A) After reviewing the price-change formula in the earlier chapteron elasticity, compute the new price and quantity. The new price is$_________ per gallon and the new quantity is _____________ milliongallons.
B) Consumers pay $_____________ of the $0.30 tax and producers paythe remaining $______________ of the tax.
Consider the market for gasoline. In the initial equilibrium, theprice is $3.00 per gallon and the quantity is 100 million gallons.The price elasticity of demand is 0.40, and the price elasticity ofsupply is 1.0. Suppose a carbon tax shifts the supply curve upwardby $0.30 and to the left by 20 percent.
A) After reviewing the price-change formula in the earlier chapteron elasticity, compute the new price and quantity. The new price is$_________ per gallon and the new quantity is _____________ milliongallons.
B) Consumers pay $_____________ of the $0.30 tax and producers paythe remaining $______________ of the tax.
A) After reviewing the price-change formula in the earlier chapteron elasticity, compute the new price and quantity. The new price is$_________ per gallon and the new quantity is _____________ milliongallons.
B) Consumers pay $_____________ of the $0.30 tax and producers paythe remaining $______________ of the tax.
RonaldLv2
28 Sep 2019
