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Homework 1 F 2013

In a local apple market, there are 5 highcost sellers and 3 low-cost sellers. There are 4 low-value buyers willing to buy a bushel of apple at price no more than $ 60. A $6 per unit tax is imposed on the seller. What is the new equilibrium price and quantity?

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35 views

Homework 1 F 2013

In a local apple market, there are 5 highcost sellers and 3 low-cost sellers. There are 4 low-value buyers willing to buy a bushel of apple at price no more than $ 60. A $6 per unit tax is imposed on the seller. What is the new equilibrium price and quantity?

Uploaded by

Jeffrey Lao
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Econ3014 Fall, 2013 Problem Set #1 (due Sept 18th Wednesday L1: before lecture in Room 6573; L2:

before tutorial in room LSK1007) 1. (Topic Intended Learning Outcomes 2.5) In a local apple market, there are 5 highcost sellers: each has one bushel of apple to sell and each has a cost of $50. There are 3 low-cost sellers: each has one bushel of apple to sell and each has a cost of $20. There are 4 low-value buyers: each is willing to buy a bushel of apple at price no more than $10. There are 4 high-value buyers: each is willing to buy a bushel of apple at price no more than $ 60. What will be the market price?

2. (2.2, 2.5, 2.4) Assume that in the market for good A, there are 10 consumers and 10 producers. Every consumer has the same preference. Every producer has the same cost structure. All are price-takers. Each consumers demand takes the following form: P=20-0.5Q. Each producers supply takes the following form: Q=3P. a. What is the market demand curve? b. What is the market supply curve? c. What is the equilibrium price and quantity? d. What is individual buyer surplus and seller surplus? 3. (2.5, 2.7) Suppose demand and supply are given by Qxd=7-0.5 Px and Qxs=0.25Px0.5. a. Determine the equilibrium price and quantity. Show the equilibrium graphically. b. Suppose a $6 per unit tax is imposed on the seller. What is the new equilibrium price and quantity? c. What if the $6 per unit tax is paid by the buyer? d. How much tax revenue does the government earn with the $6 tax?

4. (2.7) Bayes textbook, chapter 2, #19

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