Question: Answer the questions in Problem 44, assuming that the 5% sales tax is imposed on the supplier instead of the consumer. Data from in Problem

Answer the questions in Problem 44, assuming that the 5% sales tax is imposed on the supplier instead of the consumer.


Data from in Problem 44

The demand and supply curves are given by q = 100 − 2p and q = 3p − 50, respectively; the equilibrium price is $30 and the equilibrium quantity is 40 units. A sales tax of 5% is imposed on the consumer.

(a) Find the equation of the new demand and supply curves.
(b) Find the new equilibrium price and quantity.
(c) How much is paid in taxes on each unit? How much of this is paid by the consumer and how much by the producer?
(d) How much tax does the government collect?

Step by Step Solution

3.53 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a The original supply equation q 3p 50 tells us that The suppliers receive only p 005p ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Applied Calculus Questions!