Suppose that the demand curve for a particular commodity is QD =a- bP , where QD is the quantity demanded, P is the price, and a and b are constants. The supply curve for the commodity is QS =c- dP , where QS is quantity supplied and c and d are constants. Find the equilibrium price and output as functions of the constants a , b , c , and d . Suppose now that a unit tax of u dollars is imposed on the commodity. Show that the new equilibrium is the same regardless of whether the tax is imposed on producers or buyers of the commodity.

  • CreatedMarch 25, 2015
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