Question 2The demand for good X is given by QQx ==50-2P, and the supply of good X is given by20+ 4Px. The demand for good Y is given by Q =good Y is given by Q==65-Py and the supply of5+2Py. Both goods are currently untaxed, but the government ofLesotho needs to raise revenue to finance tarred road from Masianokeng to Roma by taxinggood X with tx and good Y with ty.a. Calculate the excess burden for each good as a result of tax imposition.[15]

To calculate the excess burden for each good as a result of tax imposition, we first need to…

Answered: Question 2 The demand for good X is…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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In 2018, a cold front in Barbados increased both the demand for water heaters andgasolines. The usage of gasoline was 581 tonnes, an increase from 499 tonnes in theprevious year. The Petroleum Company of Barbados advised Government officials thatdemand could outweigh supply and asked companies to increase the supply. They alsoasked major gasoline users, such as power plants, to reduce demand. i. Illustrate the effect of the cold front on the demand for gasoline using a demandcurve diagram over the two years. ii. Assuming the Petroleum Company of Barbados did not issue a directive for anincrease in supply and a decrease in demand, explain the problem that would existin the economy and how would this be corrected over time.
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