Problem Set 5 on Taxes for PADMSOO Part 1 (40 points, 4 points each) Show your work for each question. Suppose the original before-tax demand for a good is P = 100 - 2Qd and that supply is P = 5 + 3Qs. 1. What is the beforetax equilibrium quantity and price? 2 If a $5 unit tax is imposed what is the aftertax equilibrium quantity? 3 What is the after-tax equilibrium price to the consumer? 4 What is the after-tax equilibrium price to the seller? 5. How much tax revenue is raised? 6. How much tax revenue is effectively from consumers? 7 How much tax revenue is effectively from sellers? 8 How much is the deadw eight loss? 9 If the tax rate was $95 how much tax rei enue would be generated? 10. What would be the deadweight loss with a 595 tax? Part 2 (60 points. 10 points each) Briey respond to each of the following and be sure to explain your response. 1 . 2. What are the generally accepted principles of tax design that relate to the goal of equity? A) Name at least 3 ways that the income gures used in the US Federal income tax system differ from the HaigSimons denition of income? B) Why might it be bad that the US federal income tax code does not count all forms of income? Which industry structure is more likely to pass a tax on to the consumer in the form of a higher price, monopoly or perfect competition? Why? List at least 7 factors that inuence the magnitude of excess burden (inefficiency) generated by a tax. Give at least 2 examples of how some of the principles of tax design can conict with each other. You can use equity principles or efciency principles or both. In a simple 2 commodity (bread and wine). 2-factor (labor and capital) model with no savings and assuming bread is more labor intensive than wine. if a tax is put on labor used to produce bread then how are wine workers likely to be affected