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Now you have a go!Question 3.1In the market for chocolate bars, the demand function is Q D = 900 – 100P and the supplyfunction is Q S = 200P, where price is given in $ per chocolate bar and quantity is given inthousands of chocolate bars per month. The government then imposes a specific tax of$1.50 on chocolate bars, to discourage their sales.i. On the graph below, draw the original demand and supply curves and indicateequilibrium.Produced by Ian Dorton & Jocelyn Blink Page 18
ii.iii.Calculate the new supply function, after the tax, draw it on the diagram and indicatethe new equilibrium price and quantity.Calculate the change in consumer expenditure.iv.Calculate the change in producer revenue.v. Calculate the government tax revenue.vi.Calculate the loss of consumer surplus.vii.Calculate the loss of producer surplus.Calculate the effects of the imposition of a specific tax on the market (on price,quantity, consumer expenditure, producer revenue, government revenue, consumersurplus and producer surplus).Step 1Calculate the original equilibrium price and quantity from the demand and supply functions.E.g.If the demand and supply functions for a product are Q D = 2000 – 200P andQ S = -400 + 400P. Then equilibrium can be calculated by setting the equationsagainst each other, so that:Q D = Q S ,2000 – 200P = -400 + 400P2400 = 600PP = $4Produced by Ian Dorton & Jocelyn Blink Page 19
Page 1 and 2: IB HIGHER LEVEL ECONOMICSQUANTITATI
Page 3 and 4: Topic 1 - Linear Demand and Supply
Page 5 and 6: Have you fully labelled the axes?Ex
Page 7 and 8: Now you have a go!Question 1.2On th
Page 9 and 10: Question 1.5On the graphs below, pl
Page 11 and 12: Topic 2 - ElasticitiesPrice Elastic
Page 13 and 14: Cross Elasticity of Demand (XED)You
Page 16 and 17: Topic 3 - Specific Taxes and Subsid
Page 20 and 21: Substitute $4 as P in either equati
Page 22 and 23: SUBSIDIESPlot demand and supply cur
Page 24 and 25: The original producer surplus was t
Page 26 and 27: 2400 = 600PP = $4Substitute $4 as P
Page 28 and 29: Topic 4 - Price ceilings and price
Page 30 and 31: Now you have a go!Question 4.1In th
Page 32 and 33: Step 3Calculate from the diagram th
Page 34 and 35: Marginal product =In the table abov
Page 36 and 37: E.g. The firm below has revenues ba
Page 38 and 39: E.g.(2) The firm below has the foll
Page 40 and 41: ) Firm BQuantity Price AVC ATC300 $
Page 42 and 43: Produced by Ian Dorton & Jocelyn Bl
Page 44 and 45: Topic 12 - Comparative AdvantageYou
Page 46 and 47: Now you have a go!!Question 12.1Usi
Page 48 and 49: 1. Add the world supply curve if fo
Page 50 and 51: 3. Calculate the amount of revenue
Page 52 and 53: Now you have a go!!Question 13.1In
Page 54 and 55: Question 13.3In the market for bott
Page 56 and 57: i. Make a table to show the demand
Page 58 and 59: Topic 15 - Balance of paymentsYou n
Page 60 and 61: Question 15.1An extract from the ba

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