problemset6[1]

problemset6[1] - plus welfare and deadweight loss 5 Suppose...

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EC201, Fall 2007, Prof. Jordi Jaumandreu Problem set #6 Welfare analysis 1. If the inverse demand for toasters is p =60 Q , what is the consumer surplus if price is 30? 2. If the inverse demand for radios is p = a bQ , what is the consumer surplus if price is a 2 ? 3. If the inverse demand function for books is p =60 Q and the supply function is Q = p , what is the initial equilibrium? What is the welfare e f ect of a speci f c tax of τ =$2 ? 4. Suppose that the demand curve for wheat is Q =100 10 p and the supply curve is Q =10 p. The government imposes a price support at p =6 using a de f ciency payment program. a. What are the quantity supplied, the price that clears the market, and the de f ciency payment? b. What e f ect does this program have on consumer surplus, producer sur-
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Unformatted text preview: plus, welfare, and deadweight loss? 5. Suppose that the demand curve for wheat is Q = 100 − 10 p and the supply curve is Q = 10 p. The government imposes a speci f c tax of τ = 1 per unit. a How do the equilibrium price and quantity change? b. What e f ect does this tax have on consumer surplus, producer surplus, government revenue, welfare and deadweight loss? 6. Suppose that the demand curve for weath is Q = 100 − 10 p and the supply curve is Q = 10 p. The government imposese a price ceiling of p = 3 . a. Describe how the equilibrium changes. b. What e f ect does this ceiling have on consumer surplus, producer surplus, and deadweight loss? 1...
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