Answered: The annual demand for imported oranges…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 3TY

See similar textbooks

Related questions

Question

The annual demand for imported oranges is given by the following equation:
?? = 600,000 − 30,000?
where ? is the price per kilogram and ?? is quantity of kilograms demanded per year.
The supply of imported oranges is given by the equation:
?? = 20,000?

b. Suppose that a $1-per-gallon tax is levied on the price of oranges received by sellers. Use both graphic and algebraic techniques to show the impact of the tax on market equilibrium.

The annual demand for imported oranges is given by the following equation:
Qp = 600,000-30,000P
where P is the price per kilogram and Qp is quantity of kilograms demanded per yer
The supply of imported oranges is given by the equation:
Qs = 20,000P
a. Solve for the equilibrium annual quantity and price of imported oranges.
(10 marks)
b. Suppose that a $1-per-gallon tax is levied on the price of oranges received by sellers.
Use both graphic and algebraic techniques to show the impact of the tax on market
equilibrium.
(15 marks)

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

Expert Solution

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions