LG5 - perfectly inelastic. 4. Be able to graph and explain...

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University of Wisconsin Department of Economics Economics 301: Intermediate Microeconomic Theory Korinna K. Hansen Learning Guide 5 Due Date: Friday, March 7, 2008 Reading Assignment: Varian Chapter 16 up to the middle of page 302. Problem Assignment: Problems 2 and 3 on page 309. Objectives: After completing the assignment you should be able to do the following: 1. Be able to graph and describe the market equilibrium given a market demand and market supply. Why is this a stable equilibrium? 2. Be able to solve algebraically for the equilibrium price and quantity. 3. Be able to graph and explain what is special in a market equilibrium when the supply curve is
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Unformatted text preview: perfectly inelastic. 4. Be able to graph and explain what is special in a market equilibrium when the demand curve is perfectly inelastic. 5. Be able to graph and explain what happens in a market after the imposition of a quantity tax. Be able to calculate the new prices the supplier will be collecting and the consumer will be paying. 6. Be able to graph and explain the impact of a tax. Who is really paying the tax? What does that depend on? 7. Be able to show in your graph and explain the changes in consumer and producer surplus and the deadweight loss, after an imposition of a tax....
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