Question B2 The demand and supply equations for cookery lessons at Wayne's Excellent Cookery School are...

   

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Question B2 The demand and supply equations for cookery lessons at Wayne's Excellent Cookery School are represented by the following equations, with P representing the price of lessons (£) and Q representing cookery lessons: P = £1602QD P = £10 + 3Qs a. Calculate the equilibrium price and quantity of cookery lessons. [2 marks] [2 marks] b. Calculate the consumer and producer surplus at this point. c. Show the equilibrium graphically, identifying consumer and producer surplus. [3 marks] d. If a tax is placed on supply of £15 per lesson, calculate the effect that that will have on price, quantity, consumer and producer surplus and deadweight loss. [4 marks] e. Show this on your diagram or construct a new diagram showing this, clearly identifying the incidence of the tax on the consumer and the area corresponding to deadweight loss. [5 marks] Question B2 The demand and supply equations for cookery lessons at Wayne's Excellent Cookery School are represented by the following equations, with P representing the price of lessons (£) and Q representing cookery lessons: P = £1602QD P = £10 + 3Qs a. Calculate the equilibrium price and quantity of cookery lessons. [2 marks] [2 marks] b. Calculate the consumer and producer surplus at this point. c. Show the equilibrium graphically, identifying consumer and producer surplus. [3 marks] d. If a tax is placed on supply of £15 per lesson, calculate the effect that that will have on price, quantity, consumer and producer surplus and deadweight loss. [4 marks] e. Show this on your diagram or construct a new diagram showing this, clearly identifying the incidence of the tax on the consumer and the area corresponding to deadweight loss. [5 marks]

Answer rating: 100% (QA)

Part a In equilibrium Demand Supply so QD QS 160 2Q 10 3Q 5Q 150 Q 30 P160 60 100 Par... View the full answer