7. Suppose demand and supply are given by: (LO3, L04) Q² = 14 - 1P₁ and Q = P₁ - 1 - a. Determine the equilibrium price and quantity. Show the equilibrium graphically. b. Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity. does the government earn with the $12 tax?
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- The Australian government have suggested that they might need to increase GST to help fund the COVID-19 rescue package. GST is a tax on goods and services usually paid at the point of sale. Consider the market for bread. Suppose a loaf costs $4.15 and includes a 15-cent tax per loaf. q3- Suppose that at a price of $4.15 eight hundred loaves are sold and when the tax is increased to 20 cents seven hundred loaves are sold. Calculate the total tax revenue for the government before and after the change in the tax rate.You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Y and X is -1.8. How much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent? Instructions: Enter your response rounded to the nearest dollar. If you are entering a negative number, be sure to use a (-) sign. $You are the manager of a firm that receives revenues of 50,000 AED per year from product X and 40,000 AED per year from product Y. The own price elasticity of demand for product X is −1.25 and the cross-price elasticity of demand between products Y and X is −1.5. How much will your firm’s total revenues (revenues from both products) change if you increase the price of good X by 2 percent?
- QXd = 14 - 0.5PX and QXs = 0.25PX - 1 a. Determine the equilibrium price and quantity. Show the equilibrium graphically. b. Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity (see video on inverse functions).Suppose, while rummaging through your uncle's closet, you found the original painting of Dogs Playing Poker, a valuable plece of art. You decide to set up a display in your uncle's garage. The demand curve to see this valuable plece of art is as shown in the diagram below. Instructions: On the graph below, use the drop-down menu to indicate whether demand is elastic, inelastic, or unit elastic at each point. Price ($/visit) 10 14 $ 12 10 8 2 0 Demand for Dogs Playing Poker 1 Elastic per visit. 2 Inelastic 3 4 Unit elastic 5 6 7 Quantity (visitors/day) What price should you charge if your goal is to maximize your revenues from tickets sold? Instructions: Enter your answer as a whole number. o ☆Urgently need The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200 - 9.5p + 16.2 pp + 0.2Y, where Q is the quantity of coconut oil demanded in thousands of metric tons per year, p is the price of coconut oil in cents per pound, Pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially 45 ¢ per pound, Pp is 31 ¢ per pound, and Q is 1,275 thousand metric tons per year. Calculate the income elasticity of demand for coconut oil.
- Suppose that the government has a goal to reduce the demand for cigarettes in support of a health program. Given this, the government decided to impose a per-unit tax of 40 centavos per pack that is levied on the sellers or placed on the sale of cigarettes by the government. This causes a shift of the market supply of cigarettes from S to S' as shown. Price ($ per pack) S 1.50 1.40 1.30 1.15 D₂ Quantity (Millions of pack) 3 4 5 Answer the following questions regarding this case. 1. Determine the deadweight loss to society caused by the imposition of the tax. (3 points) Interpret the result. (3 points) 1 2. What tax revenue is expected to be collected by the government? (4 points) 1.25 + 1 1 D₁The store selling maize meal makes a further discovery, when the price of rice changes from R30 per kg to R26 per kg, then the quantity of maize demanded decrease from 1360 kg per month to 1238 kg per month. Use this information to answer Q3.2.1 and Q3.2.2 below. Q3.2.1 Use the point method to calculate the cross elasticity of demand for these products. (Formula + calculation) Q3.2.2 Comment on the significance of your solution in Q3.2.1 Q3.3 Identify three factors that are likley to affect the price elasticity of supply for rice. Clearly indiacte the impact that each factor will have on the price elasticity.Answer the next 2 questions according to information below: Suppose that Consumer A's demand for the good (commodity) X has increased in 16 per cent. Because the price of the close substitute good Y has increased in 8 per cent since and his demand for Y has decreased in 2 per cent. In that period of time, his own income has increased in 4 per cent and we know that this affected his demand levels. Calculate the cross elasticity of demand for goods X and Y.(Write below only the magnitude value: A positive integer). *
- To calculate elasticity along a demand or supply curve economists use the average percent change in both quantity and price. This is called the Midpoint Method for Elasticity, and is represented in the following equations: $150 $120 P $90 7. Referring to the information in the demand curve below, calculate the price elasticity of demand as price decreases from $90 at point D to $80 at point C. Be sure to show all calculations here. $60 $40 1,500 % change in quantity: % change in price = H (1600,130) Jeesus F (2000,110) E (2200,100) (2400,90) (2600,80) (1800,120) 22-21 (22+21)/2 P2-P₁ (P2+P1)/2 2,000 Q x 100 2,500 x 100 C (2800,70) B A (3000,60) 3,0003. Suppose the demand is given by the following function: Q = 2000 - 250*P. At what price per item of this product can total revenues be maximized? Fill in the Table gaps: Demand function Direct Price Elasticity Price per product (EUR) Q = 2000 - 250P |티 =D 1 (if TRmax) 250*P = 2000 - 250*P I티 = -250*P/(2000-250*P)| = 1 500*P = 2000 |-250*P| = |2000 - 250*P| P= 2000/500 P = 4Question 14 a). The demand for good A is written as follows: Q₁ = 300-3PA +2PB-0.2Y where Q₁ is the quantity demanded of good A, P, is the price of good A in dollars, P₁ is the price of good B in dollars, and Y is the consumer's income in dollars. If P₁ = $10 and P₂ = $15 (i) Calculate the quantity of good A demanded when Y = $500 and when Y = $1000 (ii) Calculate the income elasticity of demand for good A. According to your answer, is the good a normal or an inferior one? b). Consider the case where the manager of Asylum finds that customers fell from 250 to 50 on Sunday nights when the price of admission was increased from $200 to $300. Calculate the price elasticity of demand. Comment on the demand for night activity.