mrs or Le-(above, f Since this below, or equal to) the original long-run equilib
ID: 1123735 • Letter: M
Question
mrs or Le-(above, f Since this below, or equal to) the original long-run equilibrium price? (1 point) is a constant cost industry, the new long-run equilibrium price will be, Thus, the long-nan supply curve in the tchotch ke industry is 1-0 L (upward-slopint h roa tal or downward-sloping.) (1 point) Label the long-run supply curve with the letter LRS· (2 points) 3 15 8. The figure below shows the effects of a tax. Answer the questions below. (1 point each) Price (S/ticket) si0 5.s0 Quantity of tickets 100,000s) a. What is the size of the tax (answer with a dollar value)? b. What price do consumers pay before the tax is imposed? c. What price do consumers pay after the tax is imposed? d what price do producers receive before the tax is imposed? e. What price do producers receive after the tax is imposed? f which letter(s) represent consumer surplus before the tax is imposed? Which letters) represent consumer surplus after the tax is imposed? g. Which letter(s) represent producer surplus before the taxis imposed? Which letter(s) represent producer surplus after the tax is imposed? h. Which letter(s) represent government tax revenue? i. Which letter(s) represent the deadweight loss? j. Assume that over time, the elasticity of the supply curve does not change but that the demand curve becomes more elastic. What will happen to the burden of the tax placed on the consumers? Circle one: (increase, information given). (3 points) stay the same, cannot tell from theExplanation / Answer
EFFECTS OF TAX: from the question figure:
(a) Size of the tax = S2 - S1 = $(4-3) = $1
(b) Price do consumers pay before the tax is imposed can be seen where D = S1. And it is at $5.50.
(c) Price do consumers pay after the tax is imposed can be seen where D=S2. And it is at $6.
(d) Price do producers receive before the tax is imposed , it will be the same as consumers pay before the tax = $5.50
(e) Price do producers receive after the tax is imposed , is where by drawing the vertical line from D=S2 and cut S1. Then , producers receive = $5.
(f) Consumer surplus before the tax is imposed = Area above the price line $5.50 and below the demand curve. And it is represented by (A+B+E ).
Consumer surplus after the tax is imposed = Area above the price line $6 and below the demand curve. And it is represented by A.
(g) Producer surplus before the tax is imposed = Area below the price $5.50 and above supply curve S1. And it is represented by (C + D +F).
Producer surplus after the tax is imposed = Area below the price $ 5 and above supply curve S1. And it is represented by D.
(h) Government tax revenue = Area of the rectangle which is represented by (B+C).
(i) Deadweight loss = Area of the two small triangles which is represented by (E +F).
(j) Assume that over time, the elasticity of the supply curve doesnot change but the demand curve becomes more elastic . Then the burden of the tax placed on the consumers will decrease. Because more elastic the demand curve, more burden of tax will borne by producers.
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