What ad-valorem tax would generate the same revenue

Assignment Help Business Economics

Reference no: EM131092345

The following figure shows the demand and supply in a market, and the supply when there government decides to impose a specific tax and collect it from the producers. What ad-valorem tax (% collected from the producers revenue) would generate the same revenue for the government?

It won't let me post picture. But here is an explanation of graph. In a two-axis graph we measure quantity q in the horizontal axis and dollars $ in the vertical axis. We show three curves: one is labeled S, another S+t, and a third one Q; curve S follows the vertical axis until a positive value, then it is strictly increasing; that is, a higher price has a higher associated quantity; for price $8, S associates a positive value q*; curve S+t is the vertical translation of curve S by value t=2; in particular for price $10, curve S+t associates value q*; finally Q is a decreasing curve; for q=0 it starts from a value that is higher than 10 and decreases in all of its range; Q intersects S+t at p=$10 and q=q*

Reference no: EM131092345

Questions Cloud

What is the equivalent present worth of the series : A series of five constant dollar payments ( beginning with 5k at the end of the first year) are increasing at 7% per year. Assume the average general inflation is 5% and the market interest rate is 12% during the inflationary period. What is the equi..

Actual sampling distribution mean equals : A teacher needs to grade 200 exams. She claims that exams require an average of 12 minutes to grade with a standard deviation of 3 minutes. A random sample of 36 exams is selected. Suppose the sample mean is 11 minutes. What is the probability that t..

What will happen to the money ?supply : The Fed buys? $100 million of bonds from the public and also lowers the reserve requirement r. What will happen to the money ?supply?

Consider market where the price of the production : Consider a market where the price of the production is determined by p=60-Q. Initially there are Three Firms which all produce the same product. All three firms have zero marginal cost and zero fixed cost. In Nash equilibrium, all firms produce the s..

What ad-valorem tax would generate the same revenue : The following figure shows the demand and supply in a market, and the supply when there government decides to impose a specific tax and collect it from the producers. What ad-valorem tax (% collected from the producers revenue) would generate the sam..

Why does not economic theory apply to these organizations : In perfect competition, according to theory, all suppliers or consumers are price takers. In practice firms like Purdue Farms (chicken) or Jimmy Dean (sausage) bring a higher price than other brands. Why doesn’t economic theory apply to these organiz..

Short-run price elasticity of demand for gasoline : Studies have fixed the short-run price elasticity of demand for gasoline at the pump at -0.20. Suppose that international hostilities lead to a sudden cutoff of crude oil supplies. As a result, U.S. supplies of refined gasoline drop 10 percent. If ga..

Suppose there is broad increase in price of stocks : Suppose there is a broad increase in the price of stocks that causes an increase in the real wealth of individuals. Consumer spending rises in response to the increase in wealth. In the short run, this will cause

What will happen to the money supply : If the central bank sells euro 1 million of bonds and banks reduce their borrowings from the central bank by euro 1 ?million, predict what will happen to the money supply.

User Account

All Pages