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Economics 100B
Homework 6 – Solutions
Fall 0809
Problem 1
Q
D
=
1000
!
10
P
Q
S
=
10
+
200
P
a.
Q
D
=
Q
S
1000
!
10
P
=
10
+
200
P
210
P
=
990
P
=
33
7
Q
=
10
+
200
33
7
"
#
$
%
’
=
6670
7
b.
MC rises by the amount of the perunit tax, so we need to add $1 to the price charged by the
producer for any given quantity.
We first need to work with the inverse supply curve:
Q
S
=
10
+
200
P
200
P
=
Q
S
!
10
P
=
Q
S
!
10
200
With the tax:
P
=
Q
S
T
!
10
200
+
1
=
Q
S
T
+
190
200
The supply curve with the tax:
200
P
=
Q
S
T
+
190
Q
S
T
=
200
P
!
190
Q
D
=
Q
S
T
1000
!
10
P
=
200
P
!
190
210
P
=
1190
P
=
17
3
Q
=
200
17
3
"
#
$
%
’
!
190
=
2830
3
c.
The consumers price rises from
33
7
to
17
3
which is an increase of
20
21
.
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View Full DocumentThe price received by producers (after they pay the tax) falls from
33
7
to
17
3
!
1
=
14
3
which is an decrease of
1
21
.
The consumer’s share is
20
21
and the producer’s share is
1
21
.
d.
The long run supply curve is horizontal,
P
=
33
7
.
e.
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This note was uploaded on 12/02/2009 for the course ECON econ taught by Professor For got during the Spring '09 term at UCSD.
 Spring '09
 for got
 Economics

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