Do the consumers or producers pay more

Assignment Help Microeconomics
Reference no: EM13301686

Suppose that the market for corn is characterized by many small farmers/firms who have no impact on the final price of corn. The market demand for corn has been estimated to be

QD=50-P

where P is the price per ton of corn and Q is the quantity of corn (in tons). The market supply curve is

QS=5+2P.

a. Determine the market’s equilibrium price and output.

b. Suppose that a tax of $6 per unit of corn is placed on the market. What is the new equilibrium price and output?

c. Graph the original (i.e. without the tax) and new (i.e. with the tax) equilibria in the same supply and demand figure. Show the change in consumer surplus, change in producer surplus, and deadweight loss associated with the introduction of the tax.

d. Do the consumers or producers pay more of this tax? Why?

e. What is the deadweight loss of the tax?

Reference no: EM13301686

Questions Cloud

Calculate the equilibrium level of income or real gdp : Calculate the equilibrium level of income or real GDP for this economy. What happens to equilibrium Y if Ig changes to 15? What does this outcome reveal about the size of the multiplier?
What are the differences in the available products : If you made $40,000 in 1980 and in 2010, what would your income status or wealth be in each time period?
Organization and coherence of your writing : Find a relevant article from newspapers, magazines, etc. that is  related to at least one of the Macroeconomic topics we have covered this semester. Summarize the article and  comment on how the article is related to what (topics) you have learned in..
Draw the game in extensive form and predict the outcome : Firm A currently monopolizes its market and earns profits of $10M.Firm B is a potential entrant that is thinking about entering the market.If B does not enter the market,
Do the consumers or producers pay more : Suppose that the market for corn is characterized by many small farmers/firms who have no impact on the final price of corn. The market demand for corn has been estimated to be
What is the equilibrium quantity of milk if the market price : The demand for milk is given by Q=120,000-20,000P. a. What is the equilibrium quantity of milk if the market price is $3.00? b. What is the equilibrium quantity of milk if the market price drops to $2.90?
Show what happens to the individual demand curve : Graph the demand curve for QY. You may use prices for Y of 2, 4, 5, and 10 as a guide. (You can use these four points as a guide to get a reasonable approximation for the rest of the demand curve.)
Suppose that you work for a nonprofit that promotes locally : Suppose that you work for a nonprofit that promotes locally sourced agriculture. Your boss has tasked you with determining the equation for the market demand for broccoli. He or she states that you may assume that both the demand and supply curves ar..
Calculate the average total cost at these different sales : Assume that a purely competitive firm is selling 2000 television sets a day at a cost of $90,000. Assume that if the firm sells 1600 units per day, its total cost would be $60,000, and if it sold 1000 units per day, it would have a total cost of $55,..

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd