Estimate before-tax charcoal price

Reference no: EM1312381

Yesterday you were unexpectedly given a free ticket to a Def Zeppelin concert scheduled for April I. The price printed on the ticket is $75, but the most you could sell it for is only $50. Today you discover that U-Who will be giving a concert that same evening. Tickets for the U-Who concert are still available at $75. Had you known before receiving your Zeppelin ticket yesterday that U-Who would be coming, you definitely would have bought a ticket to see them, not Def Zeppelin. True or false: From what we are told of your preferences, it follows that if you are a rational utility maximize, you should attend the U-Who concert. Explain.

Because of concerns that barbecuing meat using charcoal may cause cancer, the government decides to impose a 100 percent tax at the retail level on charcoal briquets. Suppose the daily demand for charcoal was P = 120 - 2Q and the supply was P = 30 + Q, where Pis in dollars and Q is the number of 10-kg bags of charcoal sold daily.

a) Give the before-tax charcoal price and quantity exchanged.

b) Give the after-tax charcoal price to buyers, the quantity exchanged, and total tax revenues.

c) How is the tax divided among sellers and buyers?

Reference no: EM1312381

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