A tax of $1 in the market for widgets causes a deadweight loss of $2. If the tax is raised to $3 then deadweight loss will be approximately: A) 18 B) 6 C) none of these answers D) 12
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- 1-) Qd=12-2p Qs=2+2p. The government collects a tax of $1 per unit of the good. What is the type of this tax? a) income tax b-) ad valorem c-) specific special consumption tax e) social security taxSuppose there is a market that has market demand characterized as X = 30P/3. Suppose further that market supply can be written as X = P/2 2. (A) Find the equilibrium price and quantity in this market. (B) If a unit tax of $16 is imposed on good X, what are the equilibrium price, quantity, and tax revenue in the market?(C) Suppose an ad valorem tax of 30 percent is imposed on good X. The after - tax demand equation would be X = 30 P/2. Now find the equilibrium price, quantity, and tax revenue in the market. (D) What can be said about the amount of tax revenue generated under each taxing scheme, and why?The graph below represents the market for tubs of yoghurt. Answer the following questions assuming a positive per-unit tax is placed on tubs of yoghurt. P S 8.50 8 5.50 25 (a) The per-unit tax is placed on 50 55 (b) The size of the tax is $ [Select] [Select] Buyers that sellers receive after the tax is $ [Select] 80 85 (c) The price that buyers pay after the tax is $ [Select] (d) The quantity traded with the tax in place is receive $ [Select] (e) After the tax, buyers will pay $ [Select] relatively more [Select] (f) In the end, buyers pay [Select] D2 Q [Select] ✓ relative to the quantity traded without tax. per tub. ✓ less per tub. per tub. than sellers. per tub. The price tubs leading to more per tub. Sellers will because their demand curve is
- 5. Diggers Extraction's total abatement cost is TC = 40 + 2 Q?, so its marginal abatement cost is MC= 4Q, where Q is the amount of abatement. If there is an emissions tax of $120 per unit, what is this firm's total abatement cost? A) $6.32 B) $80 C) $1,940 D) $28,8401. Consider a market where the supply is given by QS = P and the demand is given by QD=20-P. (a) Suppose the government wants to raise 18¥ by imposing per unit tax on this market. What tax rate will raise the required revenue and also mini- mize the dead weight loss? (b) What is the resulting equilibrium and the dead weight loss? What is the incidence of taxation? (c) Can you think of a method for raising 18Y from this market that will (1) incur no dead weight loss and (2) be preferable to the per unit tax for both the producers and the consumers.Consider the following supply and demand function, QD = 65 − 2P and QS = 1.5P − 5, and assume a $17.50 excise tax is collected from consumers. (a) Calculate price and quantity in this market before (P1 and Q1) and after the tax (P2 and Q2). (b) What is the amount of tax revenue that is collected from con- sumers, producers and in total? (c) What is the relative tax burden of consumers and producers? (d) Show how the elasticity of supply and demand determine the shar- ing of the tax burden. (e) What is the relative tax burden of producers and consumers if the tax is collected from producers, instead?
- There are a variety of taxes that a person pays when buying an airline ticket. One tax is called the LUST fuel tax. LUST stands for leaking underground storage tank. The LUST tax is to establish a trust fund to provide money for oversight and corrective action against owners of leaking underground storage tanks and provides money for cleanup of LUST sites where the owner or operator is unknown. Is it efficient for customers of airlines to beforced to pay the tax?Price Amount Requested (Unit) Amount Offered (Unit) (IDR) 2400 120 180 2000 160 150 Based on the demand function and supply function that you got in question number 1 above, determine the new market equilibrium point if the government imposes a perunit sales tax (fixed tax) on the goods "X" of Rp. 100 / unit. How much is the tax burden borne by consumers and the tax burden borne by producers, and how much is the government tax revenueQs = 0.5P Qd = 45 - 0.25p Suppose a per-unit tax is imposed that reduces the quantity of this whiskey bought and sold in the market to 25 bottles. What is the size of the tax?
- A) The town of Dimmsdale is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and around Dimmsdale. Cleanup efforts cost Dimmsdale $5005 a day. The town has decided that it would be only fair to finance this by a “bed tax"-a per-room-per-night tax on every occupied tourist accommodation room. Denote this tax (in dollars per room per night) by t. Dimmsdale has many small hotels, guest houses, and B&Bs. The providers of these ("hoteliers") can all be assumed to be in perfect competition with each other, and they are all similar enough that tourists consider them perfect substitutes. The demand function for rooms is Q,(p) = 700 - 5p, where Qo is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = $50 per night, 60% of which is labor costs (accruing to the workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this cannot be…A) The town of Dimmsdale is a popular tourist destination. The problem is, the tourists are not always considerate of the beautiful landscapes in and around Dimmsdale. Cleanup efforts cost Dimmsdale $5005 a day. The town has decided that it would be only fair to finance this by a “bed tax"-a per-room-per-night tax on every occupied tourist accommodation room. Denote this tax (in dollars per room per night) by t. Dimmsdale has many small hotels, guest houses, and B&Bs. The providers of these (“hoteliers") can all be assumed to be in perfect competition with each other, and they are all similar enough that tourists consider them perfect substitutes. The demand function for rooms is Qn(p) = 700 - 5p, where Q, is the number of rooms demanded and p is the price per room per night in dollars. The marginal cost of providing a room is c = $50 per night, 60% of which is labor costs (accruing to the workers of Sunnyside). The total number of rooms available is fixed at Q = 400 (this cannot be…3) Equilibrium price and quantities (Qs and Qd) after Rs.6 per unit tax on producer The equations are: P = 7 - P= + Q 6.