Principles of Microeconomics 7th Edition solutions

Principles of Microeconomics 7
The market for pizza is characterized by a downward-sloping demand curve and an upward-sloping supply curve.a.Draw the competitive market equilibrium. Label the price, quantity, consumer surplus, and producer surplus. Is there any deadweight loss? Explain.b.Suppose that the government forces each piz

Principles of Microeconomics 7
Evaluate the following two statements. Do you agree? Why or why not?a.A tax that has no deadweight loss cannot raise any revenue for the government.b.A tax that raises no revenue for the government cannot have any deadweight loss.

Principles of Microeconomics 7
Consider the market for rubber bands.a.If this market has very elastic supply and very inelastic demand, how would the burden of a tax on rubber bands be shared between consumers and producers? Use the tools of consumer surplus and producer surplus in your answer.b.If this market has very inelastic s

Principles of Microeconomics 7
Suppose that the government imposes a tax on heating oil.a.Would the deadweight loss from this tax likely be greater in the first year after it is imposed or in the fifth year? Explain.b.Would the revenue collected from this tax likely be greater in the first year after it is imposed or in the fifth

Principles of Microeconomics 7
After economics class one day, your friend suggests that taxing food would be a good way to raise revenue because the demand for food is quite inelastic. In what sense is taxing food a good way to raise revenue? In what sense is it not a good way to raise revenue?

Principles of Microeconomics 7
Daniel Patrick Moynihan, the late senator from New York, once introduced a bill that would levy a 10,000 percent tax on certain hollow-tipped bullets.a.Do you expect that this tax would raise much revenue? Why or why not?b.Even if the tax would raise no revenue, why might Senator Moynihan have propos

Principles of Microeconomics 7
The government places a tax on the purchase of socks.a.Illustrate the effect of this tax on equilibrium price and quantity in the socks market. Identify the fol-lowing areas both before and after the imposition of the tax: total spending by consumers, total rev-enue for producers, and government tax

Principles of Microeconomics 7
This chapter analyzed the welfare effects of a tax on a good. Consider now the opposite policy. Suppose that the government subsidizes a good: For each unit of the good sold, the government pays $2 to the buyer. How does the subsidy affect consumer surplus, producer surplus, tax revenue, and total su

Principles of Microeconomics 7
Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day.a.To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amo

Principles of Microeconomics 7
Suppose that a market is described by the following supply and demand equations:QS52PQD53002Pa.Solve for the equilibrium price and the equilibrium quantity.b.Suppose that a tax of T is placed on buyers, so the new demand equation isQD53002(P1T)Solve for the new equilibrium. What happens to the price