--%>
Assignment Help - homework help

Question based on imposesing tax

Given equations describe market for widgets

                        Demand: P = 10 - Q Supply: P = Q - 4

Here P denotes the price in dollars per unit and Q denote to the quantity in thousands of units. Assume the government imposes a tax of $1 per unit to decrease widget consumption and raise government revenues. Determine new equilibrium quantity be? What price will the buyer pay? What amount per unit will the seller receive?

Along with the imposition of a $1.00 tax per unit, the demand curve for widgets shifts inward. At each price, the consumer desire to buy less. Algebraically, the new demand function is:
                                       P = 9 - Q.
The new equilibrium quantity is found in the same way as in (2a):
                                  9 - Q = Q - 4, or Q* = 6.5.
To find out the price the buyer pays, PB* , substitute Q* into the demand equation:
                                  PB* = 10 - 6.5 = $3.50.
To find out the price the seller receives, Ps* , substitute Q* into the supply equation:
                                  Ps* = 6.5 - 4 = $2.50.

   Related Questions in Finance Basics

  • Q : Mascot Simulation Simulation with

    Simulation with Crystal Ball Provided Workbook: Mascot Simulation Relevant Readings:"Discounted Cash Flow Modeling" folder + Text

    		•
  • Q : Define the term Judgments Judgments :

    Judgments: It is generally refers to decisions made by courts against the state. The payment of judgments is subject to a range of controls and procedures.

    		•
  • Q : Define the term Program Cost Accounting

    Program Cost Accounting (PCA): The level of accounting which identifies costs by activities executed in achievement of a purpose in contrast to the traditional line-item format. The aim of accounting at this level is to generate cost data adequately a

    		•
  • Q : Supply of automobile tires Normal 0

    Normal 0 false false

    		•
  • Q : Explain Public Service Enterprise Fund

    Public Service Enterprise Funds: For legal base accounting purposes, the fund categorization which identifies funds utilized to account for the transactions of self-supporting enterprises which render goods or services for a direct charge to user (tha

    		•
  • Q : What is Operating Expenses and Equipment

    Operating Expenses and Equipment (OE&E): This is a class of a support appropriation which comprises objects of expenditure like general expenses, communication, printing, travel, data processing, tools, and accessories for the equipment.

    		•
  • Q : Describe Section 1.50 Section 1.50 : It

    Section 1.50: It is a section of the Budget Act which A) Identifies a certain style and format for the codes employed in the Budget Act, B) Authorizes the Department of Finance

    		•
  • Q : What is an Agency Agency: It is a legal

    Agency: It is a legal or official reference to a government association at any level in the state organizational hierarchy. Or Government organizations belong to the highest sta

    		•
  • Q : Define Reimbursements Reimbursements :

    Reimbursements: The amount received as a payment for the cost of services executed, or of other expenditures made for, or on behalf of, other entity (example, one department reimbursing the other for administrative work executed on its behalf). Reimbu

    		•
  • Q : Define Legislative Counsel Bureau

    Legislative Counsel Bureau: The staffs of attorneys who draft legislation (that is, bills) and proposed amendments, and analyze, review, and render beliefs on legal matters for legislative members.

    		•