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Unformatted text preview: number of firms who continue to compete in the market. 15. A lump sum tax assessed individually on each competitive firm in the market will reduce consumer surplus by more than government tax revenue increases. The tax will have no effect on producer surplus and since W = CS + PS + T, the total welfare will decrease because the tax revenues do not completely offset the fall in consumer surplus. 30. 31. The government will choose a tariff over a quota because they gain tariff revenue and consequently suffer less deadweight loss than if a quota was imposed. 32. p = 60 Q At p = 30, Q = 30. Since the slope of the demand curve is -1, the consumer surplus will be a right triangle with base 30 and height 30. Therefore the consumer surplus is (30 x 30) = 450...
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