Econ 211 > Exam 2 > Answers
| 1 | c |
| 2 | b |
| 3 | b |
| 4 | b |
| 5 | b |
| 6 | |
| 7 | |
| 8 | |
| 9 | e |
| 10 | a |
| 11 | b |
| 12 | b |
| 13 | d |
| 14 | b |
| 15 | d |
16. Market for beer.
a) Equilibrium price = $50; quantity = 40,000.
b) Consumer surplus = $800,000; producer surplus = $800,000.
c) Tax will shift the supply curve up (vertically) by $20 per unit.
d) Consumers pay $60 after the tax. Sellers receive $40 after the tax.
e) Quantity = 30,000
f) The burden is shared by both the buyers and sellers. Each pays
$10 of the tax.
g)
h) Revenue = ($20)(30,000) = $600,000
i) CS = $450,000; PS = $450,000. Total social welfare is reduced
since the tax reduced the quantity traded below the original competitive
equilibrium amount. In other words, deadweight loss is created.
17. Demand increased.
18. Supply increased.