1.18. This question uses the algebraic method to solve prob-

lems from Appendix 3A and Appendix 6A. Suppose that the demand and supply for maple syrup are given by the following equations:

P = 53.25 - 1.250₫

Demand Curve P = 12.75 + 0.250$

Supply Curve where Q is the quantity in millions of litres and P is the price per litre, The federal government is considering imposing an excise tax equal to $1.50 a litre.

a. Determine the price and quantity in the initial equi-

librium where no tax is charged.

b. Solve for the new equilibrium quantity, the price paid by consumers, the price received by producers (excluding the tax), the tax revenue collected, and the buyer's and seller's shares of the tax burden.

c. How do your answers to parts

(a) and

(b) change after the income of consumers rises, shifting the demand curve to P = 55.50 - 1.250 ?

d. How do your answers to parts

(a) and

(b) change if instead an improvement in technology shifts the supply curve to P = 7.50 + 0.25Q?

e. How do your answers to parts

(a) and

(b) change if instead an improvement in technology shifts the supply curve to P = 11.25 + 0.1505? (Hint: Round your price and quantity figures to 2 decimal places.)