homework 6

homework 6 - f. With a $1 per unit tax, what is the long...

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Economics 100B Jacobsen Homework 6 (11/4/08) 1. Consider the following demand and short-run supply functions: Q D = 1000 ! 10 P Q S = 10 + 200 P a. What is the competitive market equilibrium price and quantity? b. Impose a $1 per unit tax that is paid by the producer. Find the new quantity and price in the short run. c. In the short run what fraction of the burden of the tax falls on consumers? Producers? Now add the assumption that the market equilibrium price and quantity you found for (a) is both a short and long run equilibrium. d. What is the long run supply curve (assuming perfect competition, free entry, and no tax)? e. What is the long run supply curve with a $1 per unit tax imposed?
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Unformatted text preview: f. With a $1 per unit tax, what is the long run price and quantity? How is the burden of the tax distributed between producers and consumers? g. Compare the dead weight loss in the short run and in the long run 2. Start with the same linear aggregate demand and short-run supply functions: Q D = 1000 ! 10 P Q S = 10 + 200 P Analyze the effect on CS, PS, and G (where G stands for government expenses) of a policy where the government sets the price of Q to be 40/7 and offers to buy any excess supply. (Note: This policy is a price floor of the type shown in Figure 9.7 of the text.) Suggested problems in the text: Chapter 9: 7, 29, and 37...
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This note was uploaded on 08/09/2009 for the course ECON 100B taught by Professor Rauch during the Winter '07 term at UCSD.

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