Unit 2 |
[MT445 | Managerial Economics] |
Assignment: Market Equilibrium and Taxes
Student Name:
In this Assignment, you will examine different factors that affect supply and demand, and also supply and demand equations to calculate the equilibrium price and quantity. In addition, you will evaluate the effects of imposing per unit tax on market price, quantity and economic welfare.
Instructions: Answer all of the following questions. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.
In this Assignment, you will be assessed on the following outcome:
MT445-2: Analyze the effects of changes in demand and supply on market equilibrium.
1. Analyze what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred. Briefly explain your answers.
a. The price of Coke decreases.
b. Average household income falls from $50,000 to $43,000
c. There are improvements in soft-drink bottling technology.
d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign.
2. Analyze the following demand and supply equations to answer the questions.
Demand Equation: Qd = 100 – 4P
Supply Equation: Qs = 10 + 6P
a. What is the equilibrium price? What is the equilibrium quantity?
Hint: Equate Qd = Qs. Solve for the equilibrium price and then the quantity.
b. Assume the government places a price ceiling at $7 in the market. What is quantity demanded? What is quantity supplied? Is there a shortage or a surplus?
3. Using the diagram below, answer the following questions:
a. How much is the per-unit (pack) tax on cigarettes?
b. What price do consumers pay after the tax?
c. How much tax revenue is collected?
d. What is the amount of deadweight loss after the tax is imposed on cigarettes?
Criteria
· This Assignment should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.
· Respond to the questions in a thorough manner, providing specific examples where asked.
· Your sources and content should follow proper APA format (A title page is not required). (Review the APA formats found in the Kaplan Writing Center. To access the Kaplan Writing Center, select this link.).
· Review the grading Rubric to ensure all points have been captured in the paper.
References (add references in APA format below)
Directions for Submitting your Assignment
Complete your Assignment in this Word document. Submit your Assignment by the end of Unit 2 by clicking the Dropbox tab and select Unit 2: Assignment from the dropdown menu, then attach your file. Make sure to save a copy of your work and be sure to confirm that your file uploaded correctly.
Unit 2 Assignment |
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Content and Analysis |
Points Possible |
Points Earned |
Problem #1 Analyze what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well). (a-d) |
12 |
|
Problem #2 Analyze the following demand and supply equations. (a-b) |
12 |
|
Problem #3 Using the diagram, answer the following questions regarding cigarette taxation. (a-d) |
16 |
|
Writing style, grammar, and APA format. |
5 |
|
Total |
45 |
|
1 of 3

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