ef2452_B07_PS2

# ef2452_B07_PS2 - and demand curves given by P = Q s + 800...

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(EF 2452) Problem Set#2 Due: Week 3, Tutorial Class Please write your name, student ID and tutorial number on top of your answer sheet. Q1. Suppose the demand and supply curve for soy milk in Hong Kong is given by, P = 12 - 1 2 Q d and P = Q s respectively, where Q d and Q s are the quantity demanded and supplied in millions of liters and P is the price (in \$ ) per liter. (a) Find the equilibrium price and quantity. Suppose the suppliers of dairy milk lobby the lawmakers and get them to pass an excise tax of \$3 per liter on soy milk . (b) Find the new equilibrium quantity and the new equilibrium prices in the market for soy milk , after the tax is imposed. (c) How is the tax divided between the buyers and the sellers? (d) If instead of the excise tax, the lawmakers impose a sales tax of the same amount on the buyers of soy milk , how would that e±ect your answer to part (c) above. Explain Q2. The market for Xbox 360 (a popular video game console) in Hong Kong has supply

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Unformatted text preview: and demand curves given by P = Q s + 800 and P = 8000-3 Q d respectively, where Q d and Q s are the quantity demanded and supplied in hundreds of units and P is the price (in \$ ) per unit. (a) Find the equilibrium quantity &amp; price for Xbox 360 in the market. Now suppose the government believes that teenagers in Hong Kong are spending an inordinate amount of time on video games at the expense of their studies and hence, to discourage their use it levies a sales tax of \$400 on each unit of Xbox 360 bought in Hong Kong. (b) How many Xbox 360’s will be sold at equilibrium? What price do buyers pay and what price do sellers get? (c) How much revenue does the government collect from the tax? (d) What percentage of the tax do the sellers and the buyers bear respectively? Q3. Practice Problem 9 (pg. 111-112) from Chapter 1.6 in Jacques’ textbook ....
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## This note was uploaded on 02/22/2009 for the course ECONOMICS 4313 taught by Professor Tsui during the Spring '09 term at HKU.

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ef2452_B07_PS2 - and demand curves given by P = Q s + 800...

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