The demand and supply conditions of market for beer are given by the following equations: P=108-Qd...
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The demand and supply conditions of market for beer are given by the following equations: P=108-Qd and P=Qs+18 a. Find the initial equilibrium price and quantity. b. Calculate the consumer surplus and producer surplus for the equilibrium. c. Suppose that government impose a price floor at P=66 to control the consumption of beer. Is this policy effective? What are price and quantity consumed after this intervention of government? d. Going back to equilibrium in part a), suppose now that government restricts the production of the beer and set a quota of 20 in this market. What are price and quantity consumed after this intervention of government? e. Going back to equilibrium in part a), suppose now that the government imposes a tax of $10 per unit on producers and the producers adjust the supply function to include the tax when t = 10. Illustrate with a diagram how the producer tax of 10 will affect the market demand and supply curves. Find the new equilibrium price and quantity after the tax. Show the initial and after tax equilibrium on your graph. f. Who gets the higher burden of the tax? Calculate the percentage tax share paid by consumers and producers. Also, calculate the deadweight loss associated with the tax policy. g. Going back to equilibrium in part a), suppose now that this market is open to international trade and international price of the beer is 36. Will this country export or import beer? What will be the quantity of export/imports? h. Given the international price level in part g), suppose that government introduces a tariff of 12 per traded quantity. Calculate the new trade level and tariff revenue. Who will benefit from this policy? The demand and supply conditions of market for beer are given by the following equations: P=108-Qd and P=Qs+18 a. Find the initial equilibrium price and quantity. b. Calculate the consumer surplus and producer surplus for the equilibrium. c. Suppose that government impose a price floor at P=66 to control the consumption of beer. Is this policy effective? What are price and quantity consumed after this intervention of government? d. Going back to equilibrium in part a), suppose now that government restricts the production of the beer and set a quota of 20 in this market. What are price and quantity consumed after this intervention of government? e. Going back to equilibrium in part a), suppose now that the government imposes a tax of $10 per unit on producers and the producers adjust the supply function to include the tax when t = 10. Illustrate with a diagram how the producer tax of 10 will affect the market demand and supply curves. Find the new equilibrium price and quantity after the tax. Show the initial and after tax equilibrium on your graph. f. Who gets the higher burden of the tax? Calculate the percentage tax share paid by consumers and producers. Also, calculate the deadweight loss associated with the tax policy. g. Going back to equilibrium in part a), suppose now that this market is open to international trade and international price of the beer is 36. Will this country export or import beer? What will be the quantity of export/imports? h. Given the international price level in part g), suppose that government introduces a tariff of 12 per traded quantity. Calculate the new trade level and tariff revenue. Who will benefit from this policy?
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a Find the initial equilibrium price and quantity The initial equilibrium price and quantity can be determined by setting the demand and supply equations equal to each other and solving for the equili... View the full answer
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