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# HW5 - ii Calculate and shade CS and PS iii Calculate and...

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Homework 1. Suppose the market for widgets is given below: 2500 5000 7500 10000 12500 15000 17500 20000 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 Demand Supply A. If a tax of \$0.30 is imposed per widget, identify: i. The new quantity, price consumers pay, the price suppliers receive and the tax incidence. ii. Calculate and shade Tax Revenue iii. Shade in the area representing the DWL B. If a tax of \$0.15 is imposed per widget, identify: i. The new quantity, price consumers pay and the price suppliers receive ii. Calculate and shade Tax Revenue iii. Shade in the area representing the DWL 2. Consider the following market: 1

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quantity \$0.20 \$0.80 \$0.60 \$0.40 20 40 60 80 100 price 120 140 1.00 Suppose a subsidy of \$0.30 per unit is given. Identify: i. The new quantity, price consumers pay and the price suppliers receive
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Unformatted text preview: ii. Calculate and shade CS and PS. iii. Calculate and shade the cost of the subsidy iv. Shade in the area representing the DWL 3. Suppose that the supply and demand for a good are given by the following equations: Q d = 300 & 10 P Q s = 100 & 40 P A. Solve for the equilibrium price and quantity. B. Suppose that a tax of \$1 : 25 is imposed. Solve for the new equilibrium price consumers pay, producers receive and tax incidence. C. Solve for the CS, PS, tax-revenue and DWL following a tax. 4. 2 A B C D E F G Demand Supply + tax Supply H A. What is the change in CS due to the tax depicted being imposed in this market? B. What is the Tax Revenue C. What is PS? D. What is DWL? 3...
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