Page 4 of 8 7-10. The market for widgets has the following supply and demand curves: Supply: P = 20 4 0.0250 sellers Demand: P = 100 - 0.0750 - buyers Initially, the market is in equilibrium at ? ( 609) market 100-20:80 P= 80-0.075Q Questions 7 to 10 concern this 5:D 20+0.025Q= 80- 0.075Q -#7014 - 60:600 x Q P= 20+ 0.025 ( 600) = $35 0. 1 7. The government places a $20 per unit tax on the buyers of widgets. At the new equilibrium, the price received by (sellers will be: A) $20 B) $25 C) $30 D) $32.50 ()$35 G) $38 F) $37.50 H) $55 1) $40 J none of the above 8. Consider again the same 20)per unit tax on the buyers of widgets, At the new equilibrium, the price paid by buyers (including the tax paid) will be: 100 - 20:80 P: 80- 0.075Q A) $35 B) $37.50 C) 340 D) $42.50 E) $45 F) $47.50 1 860 J) none of the above PT 2010. 025 Q: 80-0.075Q New Qx : 9.10 : 60 : 600 P = 100. 0. 075 ( 600 )= $55 9. How much is the excess burden due to the tax? D Asking DWL E : P: $40, Q- 800 A) $400 B) $600 C) $800 D) $1000 E) $1200 F) $1800 G)$2000 H) $2400 1) $4000 J none of the above DWL : 1/2 x (800 - 600) (40- 20) = $2000 -D DWL = 1/2 x ( A inQ) ( Ain P) or DLL= (Ding2x(AP) 2 * 10. How much would the excess burden of this $20 tax be if the equation of the original supply some answer. curve had been: Supply: P = 0.025Q $400 B) $600 C) $800 D) $1000 E) $1200 F) $1800 G) $2000 H) $2400 D $4000 J) none of the above 11-12. A consumer has a utility function for a good X given by the following function: -55 *0 Derivitive : 55 (x+5)-15-055 x2 (x15)2 15-1 where X is the quantity of the good purchased each month (quantity need not be an integer) and U is measured in dollars. Questions 1 1 and 12 concern this consumer. : 22 ( xis ) $15 1 1. If the price of X is set at(2 75) per ung, the quantity of the good purchased by this consumer each month will be: - which makes this true A) 11 B) 17 () 22 )27 1) 3: 275. _22 (27+5 ) 515 F) 35 G) 38 H) 42 Inone of the above