Suppose the the demand for a product is given by Qd = 40 − 3P , and supply by Qs = 5 + 2P Suppose that government places a tax on consumers of 10 per unit on producers. (a) What will be the price and quantity with the tax? (b) How much will be the consumer be paying, including the tax, for each unit that the consumer purchases? (c) How much will the government be collecting in tax revenues? (d) What is the consumer surplus now that a tax has been placed on the product? (e) What is the producer surplus? (f) What is the deadweight loss?

Suppose the the demand for a product is given by Qd = 40 − 3P , and supply by Qs = 5 + 2P Suppose that government places a tax on consumers of 10 per unit on producers. (a) What will be the price and quantity with the tax? (b) How much will be the consumer be paying, including the tax, for each unit that the consumer purchases? (c) How much will the government be collecting in tax revenues? (d) What is the consumer surplus now that a tax has been placed on the product? (e) What is the producer surplus? (f) What is the deadweight loss?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter16: Externalities, The Environment, And Natural Resources

Section: Chapter Questions

Problem 2DQ

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