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ECO284 - Assignment Example

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Price elasticity of demand at (Qe, Pe) is | | = _1_. That means a _1_%Δ in Q for a 1% Δ in P. At this point, demand is (circle one: elastic, Ed >1, inelastic, Ed …
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Download file to see previous pages... 15. Before this tax was imposed, total consumers’ surplus (buyers’ gain) equaled ___________200____ ($/week). Remember that the area of triangle = 0.5(base) height. Consumer Surplus = 0.5(Qe)(choke price – Pe).
17. The excess burden of a tax equals the difference between the total costs it imposes on society and the revenue collected. It includes administrative cost, compliance cost and lost consumer and producer surplus. Calculate the lost surplus using the formula for the area of triangle = 0.5 (t) Q. It equals _200______ ...Download file to see next pagesRead More
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