objective answers Principle of Microeconomics, Fall 2017 Homework #3 Name Instru
ID: 1116005 • Letter: O
Question
objective answers
Principle of Microeconomics, Fall 2017 Homework #3 Name Instructor: Hanol Lee Due: 12 December 2017 (Before class) Student ID: 1. What happens to the total surplus in a market when the government imposes a tax? a. Total surplus increases by the amount of the tax. b. Total surplus increases but by less than the amount of the tax. c. Total surplus decreases. d. Total surplus is unaffected by the tax. 2-6. The vertical distance between points A and B represents a tax in the market. Price 15 Supply 12 10 Demand 5 10 15 20 25 30 35 40 45 s0 55 60 65 70 75 8085tit 2. The equilibrium price before the tax is imposed is a $12, and the equilibrium quantity is 35. b. $8, and the equilibrium quantity is 50 c. $5, and the equilibrium quantity is 35. d. $5, and the equilibrium quantity is 50 3. The price that buyers effectively pay after the tax is imposed is a $12 b. between $8 and S12. c. between $5 and $8. d. $5Explanation / Answer
Up to 4 subparts are answered in a question. Please post again for the rest.
1. When tax is levied on the good, the buyers have to pay more and sellers receive lesser price. The tax burden effect falls on the market as a whole and thus reducing the total surplus. Answer is C.
2. $8 price and quantity 50 is the equilibrium point before tax.
3. $12 is the price paid by the buyers after imposing tax
4. $5 is the price received by sellers after tax deduction.
5. Rectangle area = 35× ( 12-5) = $245 , tax revenue.
6. Area of triangle: 1/2× (50-35) × (12-5)
1/2× 15× 7 = $52.5 , is the total dead weight loss.
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