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( 26 points) Table I shows the supply and demand for oranges in the U . Table 1 : Market for oranges in the US Price per pound Quantity demanded|...

a). Draw the pre-tax demand and supply curves in Figure 1. Label them D0 and S0. (4 points)- 2 points for each curve

b). Suppose there is no tax on orange sales. (4 points - 1 point for each row)

     

The equilibrium price is ______.

     

The equilibrium quantity is ______.

     

Buyers are spending a total of _$_____x______ = _$_____ on oranges.

     

Sellers are receiving a total of _$_____ x ______ = $_______ from selling oranges.

c). Suppose the government introduces a tax of $1.50 per pound of oranges.

 

Fill in the new tax adjusted supply schedule in the last column of Table 1. (4 points)  

 

Place the new tax adjusted supply curve in the graph and label it S1  (3 points) 

 

Then answer the following questions:

 

(1 point for each question - total of 8 points)     

 

(1 point)The new equilibrium quantity is __________.

     (1 point)The new price paid by the buyers is ___________.

     (1 point)The new price received by sellers is __________.

   

(1 point)Buyers would spend a total of _$________x_________ = $________ on  oranges.  

 

(1 point) Sellers would receive a total of _$__________x__________ = _$___________ from selling oranges.

     

(1 point) The government revenue from this tax would be $______x______ = ______.

     

(1 point) The consumers' total burden would be _________x__________ = ______.

     

(1 point) The producers' total burden would be ______x______ = ______ .


What area is indicated by what area in the graph (color the area indicating the deadweight loss with RED). (3 points)

 

(Note: Convince yourself that using the approach indicated by the schedule above gives you the same answers for b) and c) as the graphical approach.) 



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Screen Shot 2019-04-01 at 10.46.37 PM.png

1 . ( 26 points) Table I shows the supply and demand for oranges in the U .S.
Table 1 : Market for oranges in the US
Price per pound Quantity demanded| Quantity supplied\ Quantity supplied after the tax\
$
\ ( in thousand pounds )| ( in thousand pounds )
( in thousand pounds )
4. 25
675
2250
4. 00
750
2100
3.75
825
1950
3.50
900
1800
3.25
975
1650
3. 00
1050
1500
2.75
1 125
1350
2.50
1200
1200
2.25
1275
1050
2. 00
1350
4.5
4. 25
4
3.75
3.5
Price per pound ,$
3.25
2.75
2.5
2 .25
2
O
150 300 450 600 750 900 1050 1200 1350 1500 1650 1800 1950 2100 2250
Quantity of Oranges , thousand pounds
Figure ]

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