Part 1b. Assume the same tax amount is levied but on consumers (2 pts). Calculate: 1. (4 pts) The new Pe and de 2. (8 pts) CS, PS, tax revenue, and Es with the tax 3. (2 pts) Deadweight loss by calculating the change in ES from Assignment 4 plus the tax revenue (rounded to 4 decimals) 4. (4 pts) The tax incident for both consumers and suppliers expressed in both absolute terms and percentage of total tax Round all figures to 2 decimals unless noted otherwise (even if that means two zeros after an integer). However, keep more precision when using numbers throughout the calculations. Not doing so will lead to slight errors and possible loss of points. You do not need to draw a graph, but feel free if it helps. Treat the letter "y" as a consonant. Handwrite your work on one clean sheet of paper. I suggest doing a draft before doing a final version that is neat and legible. You need to show all work to get full credit. Simply writing down the correct answer will receive no points. plate nosted to Blackboard. In Assumption 1 Terms of Trade: 0.00 cherries per apple Assumption 2 Jack trades up to 0.00 Jack's Production Possibility Frontier... 25 20 ....without Trade 15 ... with Trade 10 Jack's Production & Consumption of: Without Trade With Trade Cherries Apples Cherries Apples 0.00 22.00 0.71 20.95 1.43 19.90 2.14 18.86 2.86 17.81 3.57 16.76 4.29 15.71 5.00 14.67 5.71 13.62 6.43 12.57 7.11 11.52 7.86 10.48 8.57 9.43 9.29 8.38 10.00 7.33 10.71 6.29 11.43 5.24 12.14 4.19 12.86 3.14 13.57 2.10 14.29 1.05 15.00 0.00 Jill's Production & Consumption of: Without Trade With Trade Cherries Apples Cherries Apples 45.00 0.00 42.86 0.95 40.71 1.90 38.57 2.86 36.43 3.81 34.29 4.76 32.14 5.71 30.00 6.67 27.86 7.62 25.71 8.57 23.57 9.52 21.43 10.48 19.29 11.43 17.14 12.34 15.00 13.33 12.86 14.29 10.71 15.24 8.57 16.19 6.43 17.14 4.29 18.10 2.14 19.05 0.00 20.00 Apples 5 0 0 5 10 15 20 Cherries Jill's Production Possibility Frontier... 20 ....without Trade 15 +...with Trade 10 Jack's OC. - 1.47 Apple is the fruit that Jack has a comparative advantage in lack's OC, = 0.68 Cherry is the fruit that will has a comparative advantage in. Jill's OC.-0.11 Jills's OC -2.25 Min Max Trade benefits both when the terms of trade of cherries per apple is between: : is the midpoint of the range of terms of trade in which Jack and Jill both benefit from trade Apples 5 0 0 10 20 30 40 50 Cherries Part 1b. Assume the same tax amount is levied but on consumers (2 pts). Calculate: 1. (4 pts) The new Pe and de 2. (8 pts) CS, PS, tax revenue, and Es with the tax 3. (2 pts) Deadweight loss by calculating the change in ES from Assignment 4 plus the tax revenue (rounded to 4 decimals) 4. (4 pts) The tax incident for both consumers and suppliers expressed in both absolute terms and percentage of total tax Round all figures to 2 decimals unless noted otherwise (even if that means two zeros after an integer). However, keep more precision when using numbers throughout the calculations. Not doing so will lead to slight errors and possible loss of points. You do not need to draw a graph, but feel free if it helps. Treat the letter "y" as a consonant. Handwrite your work on one clean sheet of paper. I suggest doing a draft before doing a final version that is neat and legible. You need to show all work to get full credit. Simply writing down the correct answer will receive no points. plate nosted to Blackboard. In Assumption 1 Terms of Trade: 0.00 cherries per apple Assumption 2 Jack trades up to 0.00 Jack's Production Possibility Frontier... 25 20 ....without Trade 15 ... with Trade 10 Jack's Production & Consumption of: Without Trade With Trade Cherries Apples Cherries Apples 0.00 22.00 0.71 20.95 1.43 19.90 2.14 18.86 2.86 17.81 3.57 16.76 4.29 15.71 5.00 14.67 5.71 13.62 6.43 12.57 7.11 11.52 7.86 10.48 8.57 9.43 9.29 8.38 10.00 7.33 10.71 6.29 11.43 5.24 12.14 4.19 12.86 3.14 13.57 2.10 14.29 1.05 15.00 0.00 Jill's Production & Consumption of: Without Trade With Trade Cherries Apples Cherries Apples 45.00 0.00 42.86 0.95 40.71 1.90 38.57 2.86 36.43 3.81 34.29 4.76 32.14 5.71 30.00 6.67 27.86 7.62 25.71 8.57 23.57 9.52 21.43 10.48 19.29 11.43 17.14 12.34 15.00 13.33 12.86 14.29 10.71 15.24 8.57 16.19 6.43 17.14 4.29 18.10 2.14 19.05 0.00 20.00 Apples 5 0 0 5 10 15 20 Cherries Jill's Production Possibility Frontier... 20 ....without Trade 15 +...with Trade 10 Jack's OC. - 1.47 Apple is the fruit that Jack has a comparative advantage in lack's OC, = 0.68 Cherry is the fruit that will has a comparative advantage in. Jill's OC.-0.11 Jills's OC -2.25 Min Max Trade benefits both when the terms of trade of cherries per apple is between: : is the midpoint of the range of terms of trade in which Jack and Jill both benefit from trade Apples 5 0 0 10 20 30 40 50 Cherries
