Question 6A

Given the following information:

Demand: Qd = 200 – 5P

Supply: Qs = 5P

If a quantity tax of $2 per unit sold is imposed,

(a) Considering that the government will earn revenue, overall, do you think that society benefits from such a move Yes or no and why? Explain also effect on Buyer Price? Effect on Seller Price? Effects on Quantity traded?

Question 6b

Given the following information:

Demand: Qd = 200 – 5P

Supply: Qs = 5P

If a quantity tax of $2 per unit sold is imposed,

(i)Equilibrium price before the tax

(ii) Equilibrium quantity before the tax

Calculate:

(6c) Demand and Supply equation after the tax.

Demand equation? Supply equation?

6D

(I)Buyer's price after tax?

(ii) Seller's price after tax?

Question 6e

Given the following information:

Demand: Qd = 200 – 5P

Supply: Qs = 5P

If a quantity tax of $2 per unit sold is imposed,

Calculate:

(e) Quantity after tax ?

(f) Tax revenue?

(g) Deadweight loss of the tax

Question 6h

Given the following information:

Demand: Qd = 200 – 5P

Supply: Qs = 5P

If a quantity tax of $2 per unit sold is imposed,

(h) What determines whether the buyer of the seller bears the burden of the tax?

Select one:

a. the elasticity of the demand curve

b. the elasticity of the supply curve

c. the elasticity of the supply and demand curve

d. the value of the tax

e. the price of the good

Answer rating: 100% (QA)

Question 6 Tax on a Market 6a Whether society benefits from a quantity tax depends on several factors In this case its difficult to definitively say yes or no without knowing the purpose of the tax an... View the full answer