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Unformatted text preview: Econ301: Intermediate Microeconomics Midterm 1 You have 60 minutes. Good luck! Name: University ID: July 2, 2010 1. [30 points] Suppose that market demand for good X is Q = 100- P , where P is the price of good X in $ and Q is the quantity of good X. Suppose also that the market supply of good X is Q =- 20+2 P . (a) Find the inverse market demand and the inverse market supply. (b) Graph your (inverse) market demand and (inverse) supply and show the equilibrium (carefully label the axes, the curves, and the equilibrium quantity and price ( Q e and P e )). Which area in the graph corresponds to the market consumer surplus, please calculate it. (c) The government introduces a specific tax on good X which is charged on producers. The tax is equal to τ = $1. Find the new equilibrium price and quantity ( Q * and P * ). (Hint: you could start with denoting the price payed by consumers as P , the price received by producers as P- τ . ) Which area in the graph corresponds to the market consumer surplus with the specific tax, please calculate it....
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This note was uploaded on 12/02/2011 for the course ECON 301 taught by Professor Coreyvandewaal during the Spring '09 term at Waterloo.
- Spring '09