Answer to Question #131038 in Microeconomics for tooba

Question

Q.4145 Assume linear downward sloping demand curve and linear upward sloping supply curve. If a specific tax is imposed on producer

a) Will equilibrium price be higher or lower? Will equilibrium quantity be higher or lower?

Answer _____________________________________________________________________

b) What will be effect on consumer surplus?

Answer _____________________________________________________________________

c) What will be effect on producer surplus?

Answer _____________________________________________________________________

d) Would total surplus be higher or lower?

Answer 1

a) Equilibrium price will be higher. Equilibrium quantity will be lower.

b) Consumer surplus will decrease.

c) Producer surplus will decrease.

d) Total surplus will be lower.