Unformatted text preview: Suppose the government institutes a $20 per unit tax on consumers. The new, after – tax demand curve is Qd = 710 - 2P. i) What is the deadweight loss due to the tax? ii) What are the consumer and producer burdens of the tax? iii) Which is more inelastic – demand or supply? g) Forget about the tax and return to the original equilibrium. Suppose the government imposes a price floor of $180 in the market. i) What is producer surplus both before and after the price floor is imposed? ii) Which is larger – the change in producer surplus or the deadweight loss?...
View
Full Document
- Fall '12
- various
- Microeconomics, Equilibrium, Deadweight Loss, Supply And Demand, producer, total costs ATC, tax demand curve
-
Click to edit the document details