B suppose for example that the government levies a 1

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b. Suppose, for example, that the government levies a $1 per-unit tax on a gallon of gasoline. This has the effect of shifting the supply curve up by the amount of the tax. This upward parallel shift results in a decline in supply. In a similar fashion, a reduction in a per-unit excise tax results in a downward parallel shift of the supply, which results in an increase in supply.
32. Review table 2.2. Know how the direction of the change in the determinant affects the direction of the shift in the supply curve. Know that increases in the supply are shifts to the right, and decreases in supply are shifts to the left.
a. 33. How do changes in supply differ from changes in the quantity supplied.?
34. What does producer surplus measure?
35. How is producer surplus calculated using equation 2.11? Review figure 2.7.
36. What is a market equilibrium? 37. What is a shortage?
38. What is a surplus?
39. What does net social welfare measure? .

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