Question
As an economist, you are asked by the government to calculate demand and supply functions for the domestic toenail clippers industry. As a result of
As an economist, you are asked by the government to calculate demand and supply functions for the domestic toenail clippers industry. As a result of your research, you come up with the following demand and supply functions:
QD = 100,000 - 4,000P
QS = 16,000P - 60,000
11. The producer surplus in this market will be:
a) $16,000
b) $60,000
c) $144,500
d) $578,000
e) $2,000,000
Now assume the government imposes a tax of $2 per unit on the clippers. As a result, the supply function is now:
QS = 16,000P - 92,000
- The quantity of toenail clippers now consumed will be:
- a) 16,000
- b) 32,500
- c) 34,240
- d) 60,000
- e) 61,600
- The tax will result in a deadweight loss of:
a) zero
b) $2
c) $6,400
d) $64,000
e) $433,500
- The price received by producers (net of the tax) will now be:
a) $10
b) $6
c) $9.60
d) $7.60
e) $8
Please answer the questions with diagrams and a short explanation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started