Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help Suppose the market demandand-supply curves for the gasoline market are as given below. In each case, quantity refers to millions of litres of

image text in transcribed

Please help

image text in transcribed
Suppose the market demandand-supply curves for the gasoline market are as given below. In each case, quantity refers to millions of litres of gasoline per month; price is the price per litre {in cents). Demand: P = 350 24oD Supply: P 2140 + 403 Given these equations, the equilibrium price is 17'0 cents and the equilibrium quantity is ?.5 million litres. Compute the total revenue raised by the gasoline tax. What share ofthis tax revenue is "paid" by consumers, and what share is "paid" by producers? (Hint: if the consumer price were unchanged from the pretax equilibrium, we would say that consumers pay none of the tax.) When the government imposes a tax of 42 cents per litre, Q'nm 6 million litres, the price consumers now pay is 206 cents and the price producers now receive ls164 cents. The total revenue raised by the gasoline tax is $ 2.52 million. (Enter your response rounded to two decimal places.) The percentage share of this tax revenue that is \"paid" by consumers is -%_ (Enter your response rounded to one decimal place. ,1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategic Management And Business Policy: Globalization, Innovation And Sustainability

Authors: Thomas L. Wheelen, J. David Hunger, Alan N. Hoffman, Chuck Bamford

14th Edition

0133126145, 978-0133126143

More Books

Students also viewed these Economics questions

Question

5. Give examples of binary thinking.

Answered: 1 week ago