Section4_15Oct08_Exam

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Unformatted text preview: mal price, quantity, and profit for the o rganization. 2. Ithaca d ecides to p ass a law that requires NYSEG to set their output and price levels as if it were a perfect co mpetitor. Assuming NYSEG follows the new law, what would the price, qu antity, and pro fit now be? Question 3 Consider the following supply and d emand functions fo r a product: Qs = 1/3 P + 2/3 Qd = 6 - P where P is the price, Qs is total quantity supplied, and Qd is the total quantity demanded. 1. Wh at is the equilibrium p rice and quantity? 2. Suppose the government decides to impose a unit tax o n the sellers o f $2.00 . Ho w will this impact the equilibrium price and quantity in the market? Wh at is the tax incidence between consu mers and producers o f this product? 3. Consider the o riginal situation. Suppose the government now decides to impose a unit tax on the buyers o f $2.00 . Ho w will this impact the equilibrium price and quantity in the market ? Wh at is the tax incidence bet ween consumers and producers of this product? 4. Consider the o riginal situation. Suppose the government decides to subsidize the sellers by a per unit subsidy of $2.00 . Ho w will this impact the equilibrium price and qu antity in th...
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This test prep was uploaded on 02/20/2009 for the course AEM 4150 taught by Professor Kaiser,h.m. during the Fall '07 term at Cornell University (Engineering School).

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