Consider a monopolist who has a total cost curve of: TC = 7X + (1/2)X2. The market demand equation is X d = 386 - (1/2)P.
A) What are the equilibrium quantity, equilibrium price, and profits in this market?
B) Suppose that a unit tax of $1 is placed on the monopolist. What happens to the equilibrium
quantity, equilibrium price, and profits? How much tax revenue does the government
generate?
C) Suppose that the same unit tax of $1 is placed on consumers. What happens to the
equilibrium quantity, equilibrium price, and profits? How much tax revenue does the
government generate?
D) What can be said about the taxes?
A) X* = 153, P* = $466, ? = $58522.5
B) X* = 152.8, P* = $466.4, ? = $58,369.6, Tax Rev. = $152.8
C) X* = 152.8, P* = $465.4, ? = $58,369.6, Tax Rev. = $152.8
D) The tax revenue generated is the same, whether it is levied on the buyers or sellers.
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Because new plastic and recycled plastic are substitutes, as the price of newly produced plastic decreases
A) the demand curve for recycled plastic shifts to the left. B) there is a movement up along the demand curve for recycled plastic. C) there is a movement down along the demand curve for recycled plastic. D) the demand curve for recycled plastic shifts to the right.
Which statement best defines producer surplus?
a. the amount that a seller would have liked to have charged, minus the amount that they actually received b. the amount that a seller is paid for a good minus the seller’s actual cost c. the amount that individuals would have been willing to pay, minus the amount that they actually paid d. when it is impossible to improve the situation of one party without imposing a cost on another
The value of the deposit multiplier is increased if individuals hold all their money in cash
a. True b. False Indicate whether the statement is true or false
Holding other factors constant, if a tax increase moves the government budget from deficit to surplus, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A. increase; not change B. decrease; decrease C. decrease; increase D. increase; increase