Page 463 - Microeconomics, Fourth Edition

c10competitive markets applications.qxd 7/15/10 4:58 PM Page 437

PROBLEMS 437
c) How much would the government collect in tariff freely imported at the world price of $160. Suppose the
revenues? government bans the import of television sets. How
d) What is the deadweight loss from the tariff? much would domestic producer surplus and deadweight
loss change?
10.26. Suppose that the supply curve in a market is up-
ward sloping and that the demand curve is totally inelastic. 10.29. Suppose that demand and supply curves in the
s
d
In a free market the price is $30 per ton. If an excise tax market for corn are Q 20,000 50P and Q 30P.
of $2 per ton is imposed in the market, what will be the Suppose that the government would like to see the price
resulting deadweight loss? at $300 per unit and is prepared to artificially increase
demand by initiating a government purchase program.
10.27. Suppose that the domestic demand for television How much would the government need to spend to
d
sets is described by Q 40,000 180P and that the achieve this? What is the total deadweight loss if the
s
supply is given by Q 20P. If televisions can be freely government is successful in its objective?
imported at a price of $160, how many televisions would
be produced in the domestic market? By how much 10.30. Suppose that demand and supply curves in the
s
d
would domestic producer surplus and deadweight loss market for corn are Q 20,000 50P and Q 30P.
change if the government introduces a $20 tariff per Suppose that the government would like to see the price
television set? What if the tariff was $70? at $300 per unit and would like to do so with an acreage
limitation program. How much would the government
10.28. Suppose that the domestic demand for televi- need to spend to achieve this? What is the total dead-
d
sion sets is described by Q 40,000 180P and that the weight loss at the point where the government is success-
s
supply is given by Q 20P. Televisions can currently be ful in its objective?