ECON 1050 Santa Monica College Economics Questions

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ECON 1050: Introductory Economics
Fulya Ersoy, Ph.D.
Due Date: Oct 15, 2021 Friday 11:59 PM (PT)
Problem Set 5 (Taxes)
Below, you are provided with the demand and supply curves for burritos.
Part 1: Identify the equilibrium price of a burrito and the equilibrium quantity of burritos that are
bought and sold at that price.
Part 2: Identify the amount of consumer surplus that is generated by this market.
Part 3: Identify the amount of producer surplus that is generated by this market.
Part 4: Identify the amount of total surplus that is generated by this market.
Suppose that the government imposes a tax of $3 per burrito on sellers of burritos.
Part 5: Construct the shifted curve that results from the imposition of this tax.
Part 6: What price do consumers pay for a burrito after this imposition of this tax? And what
price do sellers receive for a burrito after this imposition of this tax? How many burritos will be
transacted?
Part 7: Identify the amount of consumer surplus that is generated by this market after the
imposition of this tax.
ECON 1050: Introductory Economics
Fulya Ersoy, Ph.D.
Part 8: Suppose that the government imposes a tax of $3 per burrito on sellers of burritos.
Identify the amount of producer surplus that is generated by this market after the imposition of
this tax.
Part 9: Identify the amount of tax revenue that the government collects.
Part 10: Identify the amount of total surplus that is generated by this market after the imposition
of this tax.
Part 11: Identify the amount of deadweight loss associated with this tax.
Part 12: How would your answers to Parts 5-11 change if the government imposes a tax of $3 per
burrito on buyers of burritos instead of the sellers?

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Tags:
economics

deadweight loss

tax revenue

equilibrium price

producer surplus

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