Partial equilibrium and surplus, Macroeconomics

Assignment Help:

The city of Cabernet is very famous for its production of wine. The inhabitants of the city have an aggregate demand for wine that can be described as follows:

D(p) = Qd =150-2p

where Qd is the demanded quantity in bottles of wine and p is the price in euros per bottle. The producers' aggregate supply is:

S(p) = Qs =13p-15

where Qs is the supplied quantity in bottles of wine. The city produces only one quality of wine.

a) Find the equilibrium price and quantity.

b) Compute the consumer and producer surplus, as well as the total welfare in the city of Cabernet.

The municipality of Cabernet decides to put a tax of €7.50 on every bottle of wine sold.

c) Compute the new equilibrium price and quantity and calculate the allocative inefficiency.

d) Assume that the municipality equally redistributes tax revenues to the inhabitants. Are they better off compared to the situation before the tax was introduced?


Related Discussions:- Partial equilibrium and surplus

IS-lm model, Derive the following equilibrium for the IS-LM model:

Derive the following equilibrium for the IS-LM model:

Number of gallons of pain, The number of gallons of paint that Home Depot s...

The number of gallons of paint that Home Depot sells in a given day is normally distributed with a mean of 150 gallons and a standard deviation of 35 gallons (I realize that the di

Market demand and market supply for fish, Consider a market for fish whose ...

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 - 2.5 P and Qs = - 20 + 1.5 P respectively. The equilibrium price and quantity is

Rent, discuss modern theory of determination of rent?

discuss modern theory of determination of rent?

AD, in the keynesian cross assume that the consumption function is given by...

in the keynesian cross assume that the consumption function is given by c=200+0.75(y-t). given planned investment is 100, government purchases and taxes are both 100. then what i

Give brief introduction about interest rate, Give brief Introduction about ...

Give brief Introduction about Interest rate When you borrow money, you usually have to pay a fee for the loan. This fee is often called interest, particularly if the fee is pr

Determine the economic functions of money, Determine the Economic functions...

Determine the Economic functions of money There are three functions of economics of money - A medium of exchange. - A unit of account - Store of value.

Government can finance its budget deficit, A government can finance its bud...

A government can finance its budget deficit by doing all of the following except: A. borrowing from its central bank. B. printing money. C. selling bonds. D. buying bonds.

Calculate present value and interest rate, You win a lottery. You have the ...

You win a lottery. You have the choice of two ways to be paid. If you pick Payout Scheme X, you get $2,750 today. If you pick Payout Scheme Y, you get three payments: $1,000 today,

What is the meaning of deindustrialisation, What is the meaning of Deindust...

What is the meaning of Deindustrialisation Deindustrialisation or structural decline of many manufacturing industries along with activities like coal mining is associated with

Write Your Message!

Captcha
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