The market has the following supply: P = 0.6Q + 32 Demand in the same market is: P = -0.6Q + 101 Price is in ISK.

a) What is the ideal position, the equilibrium position in the market? Price and quantity.

b) What is the producer profit?

c) What is the total profit?

d) Show the points in a) b) and c) by drawing a picture.

e) Now it is charged at ISK 10. tax on producers, what is the price and quantity in the ideal situation, equilibrium?

f) How much is the welfare loss?

g) Show the items in e) and f) by drawing a picture

Answer rating: 100% (QA)

a Equilibrium Position To find the equilibrium position we need to set the supply and demand equatio... View the full answer