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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

  1. The quantity of toenail clippers now consumed will be:
  2. a) 16,000
  3. b) 32,500
  4. c) 34,240
  5. d) 60,000
  6. e) 61,600

  1. The tax will result in a deadweight loss of:

a) zero

b) $2

c) $6,400

d) $64,000

e) $433,500

  1. 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

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