Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"
ORDER NOW

Question Question Consider a perfectly competitive market for natural gas. Price taking natural gas consumers (electricity plants, industrial producers, and residential users) have an iso-elastic demand function given by: P=100(Q^(1/Nd)) where Nd0 is the elasticity of natural gas supply. Suppose the government is considering an ad valorem tax on producers of 10% of the sale price. a. For Nd between -5 and -1.1 (increments of 0.1) and Ns=2: i. calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. b.For Ns between 1.1 and 5 (increments of 0.1) and ND=-2 i. Calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. c. Suppose that Nd=-1.5 and Ns=2. The government when setting the tax argued that producers would not bear the brunt of the tax incidence. i. Was the government correct in making this assessment? ii. What were the implications of the government’s choice for the efficiency costs of the tax? I need help with the above problem. Thanks!. Price taking natural gas consumers (electricity plants, industrial producers, and residential users) have an iso-elastic demand function given by: P=100(Q^(1/Nd)) where Nd0 is the elasticity of natural gas supply. Suppose the government is considering an ad valorem tax on producers of 10% of the sale price. a. For Nd between -5 and -1.1 (increments of 0.1) and Ns=2: i. calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. b.For Ns between 1.1 and 5 (increments of 0.1) and ND=-2 i. Calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. c. Suppose that Nd=-1.5 and Ns=2. The government when setting the tax argued that producers would not bear the brunt of the tax incidence. i. Was the government correct in making this assessment? ii. What were the implications of the government’s choice for the efficiency costs of the tax? I need help with the above problem. Thanks!

/in /by

Question

Consider a perfectly competitive market for natural gas. Price taking natural gas consumers (electricity plants,

industrial producers, and residential users) have an iso-elastic demand function given by:

P=100(Q^(1/Nd))

where Nd<0 is the elasticity of natural gas demand.

Price taking natural gas suppliers have an iso-elastic supply function given by 

P=5(Q^(1/Ns))

where Ns>0 is the elasticity of natural gas supply. Suppose the government is considering an ad valorem tax on producers of 10% of the sale price.

a. For Nd between -5 and -1.1 (increments of 0.1) and Ns=2:

   i. calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium.

   ii. Calculate the change in deadweight loss due to the tax.

b.For Ns between 1.1 and 5 (increments of 0.1) and ND=-2

   i. Calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium.

   ii. Calculate the change in deadweight loss due to the tax.

c. Suppose that Nd=-1.5 and Ns=2. The government when setting the tax argued that producers would not bear the brunt of the tax incidence.

   i. Was the government correct in making this assessment?

  ii. What were the implications of the government’s choice for the efficiency costs of the tax?

I need help with the above problem. Thanks!

 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"