Consider a perfectly competitive market where the market demand is given by QD = 2700-50P and...

 

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Consider a perfectly competitive market where the market demand is given by QD = 2700-50P and the market supply is given by QS = 10P - 300. a. (4pts.) Find the competitive equilibrium price and quantity in a free market (i.e., without any government interventions). b. (4pts.) Find the consumer surplus, producer surplus and the economic surplus (under free market conditions) at the competitive equilibrium. c. (4pts.) Suppose the government imposes a unit tax of 6 TL/unit on the consumers. Find the equilibrium price that the consumers face, the equilibrium price that the producers face, and the equilibrium quantity traded under taxation. d. (4pts.) Under a unit tax of 6 TL/unit imposed on the consumers, find the consumer surplus, pro- ducer surplus, tax revenue (tax collected by government), economic surplus, and the deadweight loss at equilibrium. e. (4pts.) Under a unit tax of 6 TL/unit imposed on the consumers, what percentage of the tax burden is passed on to the consumers? Consider a perfectly competitive market where the market demand is given by QD = 2700-50P and the market supply is given by QS = 10P - 300. a. (4pts.) Find the competitive equilibrium price and quantity in a free market (i.e., without any government interventions). b. (4pts.) Find the consumer surplus, producer surplus and the economic surplus (under free market conditions) at the competitive equilibrium. c. (4pts.) Suppose the government imposes a unit tax of 6 TL/unit on the consumers. Find the equilibrium price that the consumers face, the equilibrium price that the producers face, and the equilibrium quantity traded under taxation. d. (4pts.) Under a unit tax of 6 TL/unit imposed on the consumers, find the consumer surplus, pro- ducer surplus, tax revenue (tax collected by government), economic surplus, and the deadweight loss at equilibrium. e. (4pts.) Under a unit tax of 6 TL/unit imposed on the consumers, what percentage of the tax burden is passed on to the consumers?

Answer rating: 100% (QA)

a To find the competitive equilibrium price and quantity we need to set the market demand equal to the market supply QD QS 2700 50P 10P 300 Now solve for P 2700 300 10P 50P 3000 60P P 3000 60 P 50 Now ... View the full answer