Calculate the CS PS GS and TS in the competitive equilibrium

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Reference no: EM131466287

Data Analysis Assignment

Q1. Consider the stated goal of the tax policy described in State Cigarette Excise Taxes - United States, 2010-2011. Using a demand and supply diagram, determine whether that motivation will be satisfied if

Demand is perfectly inelastic.
Demand is perfectly elastic

Q2. Consider the stated goal of the price ceiling policy described in Venezuela weighs pet food price controls. Using a demand and supply diagram, determine whether that motivation will be satisfied if

Demand is perfectly inelastic.
Demand is perfectly elastic.

Q3. Consider the situation described in article: There is still a lot of drama surrounding the sriracha factory in California

To summarize: The production of Sriracha sauce (sometimes called "Rooster Sauce" based on the imagery on the bottle) creates a very strong chili pepper smell, disliked by vocal residents of the town of Irwindale, where the factory has been located in since 2010. Suppose that

q^d = 1000 - ½MU

q^s = 2MC - 20

And that the marginal negative externality the residents claim can be determined to be $250.

a) Calculate the CS, PS, GS and TS in the competitive equilibrium.

b) Calculate the CS, PS, GS and TS if the government reaches the socially optimal quantity using

i. A tax on sriracha production

ii. A quota on sriracha production

iii. A price ceiling on srirarcha

iv. A price floor on sriracha

c) The questions above assumed that the Sriracha factory created a negative externality. Suppose instead that "fresh-smelling-air" (air with no Sriracha chili smell) is a public good. Why are economists more likely to support government regulation if the population of Irwindale grew after the factory opened?

Attachment:- Assignment File.rar

Reference no: EM131466287

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