Question: 4 suppose the market for grass seed can be expressed...
4. Suppose the market for grass seed can be expressed as:
Demand: Qd = 200 - 5P
Supply: Qs = 40 + 5P
If the government collects a $5 specific tax from sellers (here you can change the supply equation to Qs = 40 + 5(P-t) or Qs = 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: Qs = 3p − 2
Qd = 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.