ECON 1900 Study Guide - Quiz Guide: Margarine, Productive Efficiency, Opportunity Cost

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amaranthmuskrat712

21 Feb 2013

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Feb7, 2013 ( /28: the market for widgets is illustrated in the diagram below. (16 marks) Qd: label and p0) on the diagram. the equilibrium quantity and price (q0. Widgets (units: if the government would like to support the revenue of producers by introducing a price floor of per unit and purchase the surplus at this price floor. What is the resulting quantity demanded by consumers___500 units_________________. What is the resulting quantity supplied by producers ___800 units _____________. What quantity will the government have to purchase___300 units ______________. What is the resulting consumers" expenditure on widgets ____(500) = _________ What is the resulting producer revenue from their total widget production__(800) = ___. _ per unit subsidy on the graph to the right. Note that you could have shifted the demand curve up by instead. __(800) = ________what is the resulting price paid by consumers?_____

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?

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ECON 1900 Study Guide - Quiz Guide: Margarine, Productive Efficiency, Opportunity Cost

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