Determine the horizontal and vertical intercepts of the demand schedule and the vertical intercept...

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Determine the horizontal and vertical intercepts of the demand schedule and the vertical intercept of the supply schedule. Add the graphs of the supply and demand functions to Figure 1. Demand: Horizontal – 300 Vertical – 300 10 = 30 Supply: Vertical – 30 15 = 2 (d) Suppose the government imposes a fixed tax of t = $6 per good so that the supplier only receives P-t = P-6 of the sale price P. Give a formula for the new supply schedule and add the graph of this line to Figure 1. QS = 15P-120 or P = 8+0.0666667QS (e) Compute the new equilibrium price P † and the equilibrium quantity Q † . P † = 16.8 and Q † = 132 Supply: 15P-Q = 120 Demand: 10P+Q = 300 Matrix:  XXXXXXXXXXP Q  =  XXXXXXXXXX . P † = |A1| |A| = XXXXXXXXXX = 420 25 = 16.8 Q † = |A2| |A| = XXXXXXXXXX = XXXXXXXXXX = 132 (f) What is the total tax revenue? How much of the tax is paid by the consumer? by the producer? Indicate areas on Figure 1 which show the total tax burdens for the consumer and the producer

David · Accepted Answer

Problem 1) 
Solution  Inter  industry matrix: [  20 100 20 20] 
                                                          [ 60  50   60 90] 
                                                          [45  10   10  15] 
                                                          [ 50  20  80  100] 
Demand y=[40 60 120 140]T 
1.1 from inter industry matrix  $100 worth agricultural good is required for $320 manufacturing good 
production. $1 manufacturing good can be produced from $100/$320=$5/16=$.3125 
1.2 . Second column of Leontief inverse matrix ( .61 1.20 .21 .45)T.By definition second column 
represents the increase in demand of respective sector by increasing demand. using Leontief inverse 
$1 increase in final demand of manufacturing=.61+1.20+.21+. 45=$2.47 ( second column)
Problem 2) 
2.1  & 2.2  since there is no information about govt. expenditure , G I am taking that as 0 
IS : Y=C +I=.75Y+80-25r+720 
 .25Y=-25r+800 
LM: Money demand = transaction precautionary + speculative 
 Md=.2Y-15r + 1500=Ms=2000 
 .2Y=15r+500 
Solving for IS and LM equations give Y*=2800, r*=4
Problem 3) 
3.1  
      Y=C+I 
 Y-C-I=0    (1) 
C=b(1-t)Y… (2) 
-b(1-t)Y+C=0…(2) 
I=e-fR 
fR+I=e… (3) 
kY-hR=M..

Determine the horizontal and vertical intercepts of the demand schedule and the vertical intercept of the supply schedule. Add the graphs of the supply and demand functions to Figure 1. Demand:...

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