ANSWERS TO HOMEWORK WEEK TWO EC141

ANSWERS TO HOMEWORK WEEK TWO EC141 - (c) With a tax of $4...

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ANSWERS TO HOMEWORK WEEK TWO EC141 CHAPTER 3
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(b) (e)
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3. If the supply of new homes kept pace with the expanding demand, prices would remain constant. The supply curve shifts to the right at the same rate as the demand curve shifts to the right: 6. (a) A simple demand shift; same diagram for both cities (b) Rightward shift of supply with new development; leftward shift of demand with falling incomes; same diagram for both cities (assumes that the shifts are equal) Q P 1 = P 2 0 D S
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CHAPTER 4 1 (a)
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8. (a) (b) With free trade in oil, Americans would pay $70 per barrel. At this price, the U.S. demand schedule shows that Americans would buy 15 million barrels per day. The U.S. supply schedule shows that U.S. producers would supply 6 million barrels per day, with the remainder—9 million barrels—imported from foreign sources.
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Unformatted text preview: (c) With a tax of $4 per barrel, Americans would have to pay $74 for imported oil. Quantity demanded would decrease from 15 million to 13 million barrels. Of this, American producers would supply 10 million barrels, whereas imports would be cut back from 9 million to 3 million barrels. The U.S. government would collect a tax of $4 3 million = $12 million per day. (d) American oil consumers are harmed by the tax; they are paying a higher price for oil. American oil producers are helped by the tax; they receive a higher price for oil, and this induces them to produce more oil. Foreign oil producers are harmed because Americans buy less imported oil. Finally, the U.S. government (and the U.S. taxpayer generally) benefit from the tax revenue....
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ANSWERS TO HOMEWORK WEEK TWO EC141 - (c) With a tax of $4...

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