Demand as a function of price is D(p) = 100 - p. Supply as a function...

 

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Demand as a function of price is D(p) = 100 - p. Supply as a function of price is S(p) = p. The government puts a tax of 8 on this item. What is the total deadweight loss from this tax? Use two decimals in your answer. (Hint: let the selling price be p. Then the consumer will pay p plus the tax. Equilibrium in the market means quantity demanded is equal to quantity supplied. Then think about how much the equilibrium quantity will decrease.) Demand as a function of price is D(p) = 100 - p. Supply as a function of price is S(p) = p. The government puts a tax of 8 on this item. What is the total deadweight loss from this tax? Use two decimals in your answer. (Hint: let the selling price be p. Then the consumer will pay p plus the tax. Equilibrium in the market means quantity demanded is equal to quantity supplied. Then think about how much the equilibrium quantity will decrease.)

Answer rating: 100% (QA)

To calculate the total deadweight loss from the tax we need to determine the change in the equilibri... View the full answer