Many studies on rats and mice have established that charred meat grilled over hot coals causes’ cancer. Since the government cannot easily regulate home cooking methods, an alternative method has been proposed to discourage the consumption of barbecued meat. The proposal is to place a 100 percent tax at the retail level on charcoal briquettes. Suppose the daily demand for charcoal was P = 120 - 2Q and the supply was P = 30 + Q, where P is in dollars per bag and Q is the number of 20 - lb bags of charcoal sold weekly.
a. What is the before-and after-tax price of charcoal?
b. What is the before-and after-tax quantity of charcoal?
c. How is the tax divided among sellers and buyers?

  • CreatedDecember 12, 2014
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