Question Completion Status D-129-SP and Qs -358+ 76P before a tax of $2 is added

Question

Question Completion Status D-129-SP and Qs -358+ 76P before a tax of $2 is added to each unit of the good. What is the total arnount of taxes paid by producers? (Hint: Becouse suppliers moke their decision based on how much they receive after tax, the new supply function i Qs 358+ 76(P-2) ) ROUND TO THE NEAREST CENT 10.75 QUESTION S QD-129-5P and Qs . .358 + 76p before a tax of S2 is added to each unit of the good. What is the producer surplus after taxes? Hint: Because suppliers make their decision based on how much they receive after tox, the new supply function is Qs 358+76(P-2) ) ROUND TO THE NEAREST CENT QUESTION 6 QD-110- 2P and Qs- 447 +79P before a tax of $1 is added to each unit of the good. What is the consumer surplus after taxes? ount Becouse suppliers make their decision based on how much they receive after to, the new supply unction i OS-.447·79(P) ) ROUND TO THE NEAREST CENT QUESTION 7 QD-76- 2P and Qs -308+ 72P before a tax of $1 is added to each unit of the good. What is the dead weight loss after taxes? Hn: Becouse suppliers make their decision based on how much they receive afher tax, the new supply function& Qs 308 +72(P-1) ) ROUND TO THE NEAREST CENT Save All Arswers cick Save and Submit to save and submit. Click Sove All Answers to sove all onswers

Explanation / Answer

(Question 4)

New supply function after tax: QS = - 358 + 76P - 152 = 76P - 510

Equating with QD,

129 - 5P = 76P - 510

81P = 639

P = $7.89 (Price paid by buyers)

Q = 129 - (5 x 7.89) = 129 - 39.45 = 89.55

Tax revenue = $2 x 89.55 = $179.10

(Question 5)

From supply function, when QS = 0, P = 358/76 = $4.71 (Minimum acceptable price)

Price received by producers aftertax = Price paid by buyers - Unit tax = $7.89 - $2 = $5.89

Producer surplus = Area between supply curve and price received by producers

= (1/2) x $(5.89 - 4.71) x 89.55 = (1/2) x $1.18 x 89.55 = $52.83

(Question 6)

From demand function, when QD = 0, P = 129/5 = $25.8 (Reservation price)

Consumer surplus = Area between demand curve and price paid by buyers

= (1/2) x $(25.8 - 7.89) x 89.55 = (1/2) x $17.91 x 89.55 = $801.92

(Question 7)

In pre-tax equilibrium, QD = QS

129 - 5P = - 358 + 76P

81P = 487

P = $6.01

Q = 129 - (5 x 6.01) = 129 - 30.05 = 98.95

Deadweight loss = (1/2) x Tax per unit x Change in quantity = (1/2) x $2 x (98.95 - 89.55) = $1 x 9.4

= $9.40

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