02 May Assume that demand and supply for a product over a period of time, respectively, are
Assume that demand and supply for a product over a period of time, respectively, are:
Qdx = 15 – 0.5Px and Qsx = 0.25Px – 3.
(a) Calculate the equilibrium price and quantity. Clearly show your steps and manual calculations.
(b) Quantify and discuss the impact of imposing a price of $20 per unit on the market, including the full economic price paid by consumers. Clearly show your steps and manual calculations.
(c) If government should impose a $8 excise tax on the product, determine the new equilibrium price and quantity. Clearly show your steps and manual calculations. Graphically illustrate your answer.
(d) Calculate the amount of tax revenue that government would earn with $8 excise tax. Clearly show your steps and manual calculations.
3. (25 points)
Graphically illustrate and carefully discuss the impact of substantial inflationary expectations on the market equilibrium conditions (equilibrium quantity and price) of automobiles in the United States.
4. (15 points)
Consider the situation presented in Question #23, Chapter 2 of your textbook and answer the following question: Evaluate the governor's plan to reduce juvenile delinquency with the aid of an appropriate diagram.
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