# Question: 4 suppose the market for grass seed can be expressed...

###### Question details

4. Suppose the market for grass seed can be expressed as:

Demand: *Q ^{d} = 200 -
5P*

Supply: *Q ^{s} = 40 +
5P*

If the government collects a $5
specific tax from sellers (here you can change the supply equation
to *Q ^{s} = 40 + 5(P-t) or Q^{s} = 15+
5P*,

- How much will the quantity demanded change from the amount demanded before the tax?
- What price will consumers pay after the tax?
- What price will sellers receive after the tax?
- What is the consumer surplus before tax
- What is the consumer surplus after tax
- What is the tax revenue?

. Suppose the market for corn is given
by the following equations for supply and demand:
*Q ^{s} = 3p − 2*

*Q ^{d} = 10 − P*

where Q is the quantity in millions of bushels per year and p is the price.

a.Calculate the equilibrium price and quantity. Sketch the supply and demand curves on a graph indicating the equilibrium.

b. If a price floor is imposed at $5 per bushel, will there be a surplus or a shortage? What is the quantity of excess supply or demand that results? Draw a graph to show this.