370_Exam2_Sample Questions

370_Exam2_Sample Questions - Sample Questions for Exam 2 1....

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Unformatted text preview: Sample Questions for Exam 2 1. To meet its commitments under the Montreal Protocol, the United States implemented certain market-based policy instruments, including an excise tax on ozone depleters. Consider the following market for CFC-12 before the excise tax is imposed. The Demand curve is given by Q = 18 . 40- . 5 p and the Supply curve is given by Q = 10 + 2 . 5 p where p is the price per pound. Now assume that a 60 cents per unit tax is used, which shifts the supply curve to Q = 8 . 50 + 2 . 5 p . What part of the tax is paid by the buyers and what part is paid by the sellers? (a) Buyers pay 30 cents and sellers pay 30 cents per unit. (b) All the tax is paid by the sellers. (c) Buyers pay 50 cents and sellers pay 10 cents per unit. (d) None of the above. 2. To meet its commitments under the Montreal Protocol, the United States implemented certain market-based policy instruments, including an excise tax on ozone depleters. Consider the following market for CFC-12 before the excise tax is imposed. The Demand curve is given by Q = 18 . 40- . 5 p and the Supply curve is given by Q = 10 + 2 . 5 p where p is the price per pound. Now assume that a 60 cents per unit tax is used, which shifts the supply curve to Q = 8 . 50 + 2 . 5 p . What is the tax revenue generated?...
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This note was uploaded on 04/14/2010 for the course ECON 370 taught by Professor Helfand during the Winter '08 term at University of Michigan.

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370_Exam2_Sample Questions - Sample Questions for Exam 2 1....

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