The market for cars in Santiago de Chile has supply and demand given by: by P = 0.4Qs and P = 7,000-Qd.

a. How many cars are bought in equilibrium?

The local government wants to raise revenue by levying a tax on buyers. Assume the tax is $1,400.

b. How many cars are sold in equilibrium, and at what price?

c. What is the tax burden on the consumer? And on the seller?

d. How much revenue does the government raise from the tax?

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Examining Santiago Chiles Automobile Market a Equilibrium Excluding Tax By setting the two pricing equations equal we can determine the equilibrium pr... View the full answer