A market has an equilibrium price of 3 and an equilibrium quantity of 2. (a) If...
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A market has an equilibrium price of 3 and an equilibrium quantity of 2. (a) If this market's clasticity of demand is given by € = P 4-p I find its demand function, q" (p). (b) The market has a supply equation of the form p = aq + b₂ for some positive numbers a and b. Given that the producer surplus is 1, find the values of a and b. Hence find the supply function, q (p), for this market. (c) An excise (or per-unit) tax of T is imposed on the market. Find the new equilibrium price and quantity of the market. Hence find the value of T that maximises the tax revenue. A market has an equilibrium price of 3 and an equilibrium quantity of 2. (a) If this market's clasticity of demand is given by € = P 4-p I find its demand function, q" (p). (b) The market has a supply equation of the form p = aq + b₂ for some positive numbers a and b. Given that the producer surplus is 1, find the values of a and b. Hence find the supply function, q (p), for this market. (c) An excise (or per-unit) tax of T is imposed on the market. Find the new equilibrium price and quantity of the market. Hence find the value of T that maximises the tax revenue.
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Answer rating: 100% (QA)
Lets go through each part of the problem step by step a To find the demand function qp we need to integrate the elasticity of demand equation E P4P Th... View the full answer
Related Book For
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder
Posted Date:
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