All categories

3 years ago

Suppose that a $2 per widget tax is levied on the sellers of widgets. How much revenue is collected from this tax on widgets

Business

1 answer:

JulijaS [17]3 years ago

8 0

Complete Question:

The supply and demand for widgets are given by the following equations: Q = 2,000 - 300P QS = -100 +100P A. where P=price per widget and QD and Qs are the quantities of widgets demanded and supplied. Suppose that a $2 per widget tax is levied on the sellers of widgets. How much revenue is collected from this tax on widgets?

Answer:

The revenue collected from this tax on widgets is

$4,200 (2,100 * $2)

Explanation:

a) Data and Calculations:

The demand for widget = Qd = 2000-300P

The supply for widget = Qs = -100+100P

At equilibrium, the price before tax can be calculated as follows:

Qd = Qs --this is the equilibrium condition

Therefore, 2000-300P = -100+100P

or 2000 + 100 = 300P + 100P

that is 2100 = 400P

or 400P = 2100

Therefore, P = 2100/400

Price per unit = $5.25

The revenue collected from this tax on widgets = $2 * 2,100 = $4,200

b) Since the widget tax is levied on the sellers, it implies that the revenue collected from the widget tax will total $4,200 based on the equilibrium quantity of 2,100 widgets.

You might be interested in

If the economy is at full employment and the Federal Reserve undertakes a policy of increasing the money supply at a constant ra

Korvikt [17]

Think through this one:
--The bottom two answers concern budget deficits or surpluses, but the question doesn't tell you anything about tax revenue vs. government spending. So neither of those answers applies.
--The first answer is impossible because the economy is already at full employment, so employment can't increase
--Inflation is the answer. Increasing the money supply by 6% while output is increasing by only 2% means that prices will rise: the money supply is increasing faster than output.

7 0

3 years ago

Read 2 more answers

Prepare the journal entries to record the following transactions on Sunland Company's books using a perpetual inventory system.

Volgvan

Answer:

a. March 2, 202x, merchandise purchased on account from Splish Brothers, credit terms 2/10, n/30

Dr Merchandise inventory 885,600

Cr Accounts payable 885,600

b. March 6, 202x, defective/wrong merchandise returned to Splish Brothers

Dr Accounts payable 110,200

Cr Merchandise inventory 110,200

c. March 12, 202x, paid invoice to Splish Brothers within discount term

Dr Accounts payable 775,400

Cr Cash 759,892

Cr Purchase discounts 15,508

purchase discount = purchase balance x 2% = $775,400 x 2% = $15,508

8 0

3 years ago

For each of the following annuities, calculate the present value. (Enter rounded answers as directed, but do not use rounded num

sammy [17]

Answer:

Answer for the question:

For each of the following annuities, calculate the present value. (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Present Value Annuity Payment Interest Rate Years $ _____ $ 2,100 8 % 7 $ _____ $ 1,095 7 % 9 $ $11,000 9 % 18 $ $ 30,000 11 % 28

is given in the attachment.

Explanation:

4 0

3 years ago

Read 2 more answers

The LMC Partnership has 3 partners and is concerned about what would happen to their $300,000 business if one of the partners sh

zhuklara [117]

Answer:

$50,000

Explanation:

Since the partnership is valued at $300,000, then each partner's stake = $300,000 / 3 = $100,000

that means that each partner must purchase 2 policies (one for each of the other partners) that covers his/her stake = $100,000 / 2 policies = $50,000 per policy

4 0

3 years ago

Aaron would like to inform a customer that she has not paid her bill. Aaron should _____.

nika2105 [10]

Aaron should write a polite business letter informing the customer of how much he owes.

7 0

3 years ago

Read 2 more answers