The Local Community Is Considering Two Options to Raise Money

question 55

Essay

The local community is considering two options to raise money to finance a new civic center. The first option is to institute a per unit tax on restaurant meals of $2.46. The market demand and supply functions for restaurant meals are: Q_D = 800,000 - 6,000P and Q_S = 14,500P - 225,000. Calculate consumer and producer surplus with the per unit tax. The second option the community is considering implementing is an income tax. If an income tax is implemented, the new demand for restaurant meals is: Q'_D = 794,875 - 6,000P. Calculate the level of consumer and producer surplus in the restaurant market with the income tax. Which of the two options will reduce the sum of consumer and producer surplus the least?

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Definitions:

Pain

An unpleasant sensory and emotional experience associated with actual or potential tissue damage, or described in terms of such damage.

Cognitive-Behavioral

A therapeutic approach that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic process.

Masters and Johnson

A pioneering research team in the field of human sexual response and therapy, consisting of William Masters and Virginia Johnson.

Sexual Dysfunctions

Disorders that prevent an individual from experiencing satisfaction from sexual activity, including problems with sexual desire, arousal, and orgasm.