Econ $2101$: Assignment $5$

Q$1(3$ points$)$

Widgets are produced by a competitive industry and sold for $$5$ apiece.

If the widget industry were monopolized, widgets would sell for $$8$ apiece.

Illustrate this scenario in a proper diagram.

Please upload only the answer to Question $1!$

Q$2(3$ points$)$

Each widget firm must have a license. The government sets the highest license fee that widget firms are willing t

Illustrate in the diagram you already drew for Question $1,$ the licence fee set by the government.

Please upload only the answer to Question $2!$

Q$3(3$ points$)$

The government is considering imposing an excise tax that would cause the price of widgets to rise to $$8.$

Copy the diagram you drew for Question $1$ and $2,$ and use it to show the tax per widget the government charges.

Please upload only the answer to Question $3!$

Q$4(3$ points$)$

Show, in the diagram you already drew to answer Question $3,$ the tax revenue from the excise tax.

Please upload only the answer to Question $4!$

Q$5(3$ points$)$

Copy the diagram you used to answer Questions $3$ and $4,$ and use it to illustrate the amount by which license fees will have $1$ change if the tax is imposed.

Please upload only the answer to Question $5!$

Q$6(3$ points$)$

Does the excise tax lead to a net gain or net loss in government revenue?

Please upload only the answer to Question $6!$