Consider the market for ice cream cones. Suppose that supply in this market is given by P^S = Q^S and demand is given by P^D = 30 - 4Q^D. Answer the following question. Compute consumer surplus, producer surplus, and government surplus in the market for ice cream cones with and without the $1.00 per ice cream cone tax. Compute the deadweight loss created by the tax.

Consider the market for ice cream cones. Suppose that supply in this market is given by P^S = Q^S and demand is given by P^D = 30 - 4Q^D. Answer the following question. Compute consumer surplus, producer surplus, and government surplus in the market for ice cream cones with and without the $1.00 per ice cream cone tax. Compute the deadweight loss created by the tax.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 4WNG

See similar textbooks

Similar questions

What is the nature of the deadweight loss accompanying taxes? Why is it often referred to as an excess burden?
Consider a free market with demand equal to QQ = 900 − 10PP and supply equal to QQ = 20PP. Now the government imposes a $15 per unit subsidy on the production of the good. What is the consumersurplus now? The producer surplus? Why is there a deadweight loss associated with the subsidy, and whatis the size of this loss?
Consider a free market with demand equal to QQ = 900 − 10PP and supply equal to QQ = 20PP. Now the government imposes a $15 per unit subsidy on the production of the good. What is the consumersurplus now? The producer surplus? Why is there a deadweight loss associated with the subsidy, and whatis the size of this loss? Demonstrate in a graph.
Suppose that the demand curve for wheat is and the supply curve is Producer surplus Q = 400-40p The government provides producers with a specific subsidy of s= $2 per unit. How do the equilibrium price and quantity change? The equilibrium price decreases by $1 and the equilibrium quantity increases by $40 units. (Enter numeric responses using real numbers rounded to two decimal places.) What effect does this tax (subsidy) have on consumer surplus, producer surplus, government revenue, welfare, and deadweight loss? Consumer surplus increases by $ 220. by $ Qs = 40p.
ASAP The demand curve for a product is p = 113 - q 2 and the supply curve is given by p = (q+1) 2 . At the equilibrium price, determine the consumer's surplus and the producer's surplus. Sketch the curves and indicate the consumer's surplus and the producer's surplus. What happens to the value of consumer and producer surplus if a tax of $ 1 is imposed on the supply of the product?
Consider a free market with demand equal to Q = 1,200 – 10P and supply equal to Q = 20P. A. What is the value of consumer surplus? What is the value of producer surplus? What is the total surplus? B. Now the government imposes a $10 per unit subsidy on the production of the good. What is the consumer surplus now? The producer surplus? Why there is a deadweight loss associated with the subsidy, and what is the size of this loss
Suppose the equations below represent the market supply and demand for cellular service. QD = 50 – 0.25P QS = 2P – 76 a. Graph the supply and demand curves, and label the equilibrium quantity and price. b. Calculate the amount of Consumer Surplus and Producer Surplus in this market. c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold. d. Calculate the amount of deadweight loss associated with this per-unit tax. e. Calculate the share of the tax burden that the sellers bear. f. Briefly explain why there is a relationship between the slopes of the supply and demand curves, and the tax burden on each side of the market.
The supply of headphones is linear and upward sloping, and the demand for headphones is linear and downward sloping. Suppose the government imposes a per-unit tax in the market for headphones. In this market, the tax decreases consumer surplus by $5,200.00, and it decreases producer surplus by $2,800.00. The tax decreased the equilibrium quantity of the good by 1,200.00 headphones, and it generated a deadweight loss of $2,400.00. The tax revenue generated by this tax is $ Part 2 The per-unit tax in the market for headphones must be $ Part 3 With the tax in place, the total number of headphones traded in the market is headphones.
Assume that the monthly demand for Gala apple in the US is given by q=1200-300p and quantity is in million pounds. The monthly supply of Gala is q= -200+400p for p>$0.5. Now assume that the government intend to imposed a quantity tax equal to $t on each pound of apple. What level of t will maximize the government revenue?
Given the following information Q = 240 - 5P Qs =P where is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose that the government decides to impose a tax of 512 per unit on sellers in this market. Determine the quantity and consumer surplus after tax
Given the following information Q = 240 - 5P Qs =P where is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose that the government decides to impose a tax of 512 per unit on sellers in this market. Determine the producer surplus after tax
If the demand and supply curve for computers is: D = 200 - 5P, S = 40 + 3P Where P is the price of computers. Graph demand and supply curve by showing intersection points with both axes. Find equilibrium price and quantity. Calculate Consumer and Producer surplus by showing respective area on the graph. Analyze the market for computers if government imposes 1.2$ dollar tax for each computer sold by seller. Discuss the impact of this tax on the market and consumer surplus.