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The local community is considering two options to raise money to finance a new civic center. The first option is to institute a per unit tax on restaurant meals of $2.46. The market demand and supply functions for restaurant meals are: Q₁ = 800,000 - 6,000P and Q = 14,500P-225,000. A. Calculate consumer and producer surplus with the per unit tax. B. The second option the community is considering implementing is an income tax. If an income tax is implemented, supply remains unchanged but the new demand for restaurant meals is: Qnew 794,875-6,000P. Calculate the level of consumer and producer surplus in the restaurant market with the income tax. = C. Which of the two options will reduce the sum of consumer and producer surplus the least? The local community is considering two options to raise money to finance a new civic center. The first option is to institute a per unit tax on restaurant meals of $2.46. The market demand and supply functions for restaurant meals are: Q₁ = 800,000 - 6,000P and Q = 14,500P-225,000. A. Calculate consumer and producer surplus with the per unit tax. B. The second option the community is considering implementing is an income tax. If an income tax is implemented, supply remains unchanged but the new demand for restaurant meals is: Qnew 794,875-6,000P. Calculate the level of consumer and producer surplus in the restaurant market with the income tax. = C. Which of the two options will reduce the sum of consumer and producer surplus the least?
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A Calculate consumer and producer surplus with the per unit tax To calculate consumer and producer surplus with the per unit tax we need to find the e... View the full answer
Related Book For
International Financial Management
ISBN: 978-0078034657
6th Edition
Authors: Cheol S. Eun, Bruce G.Resnick
Posted Date:
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