Demand for parking in the City of Chambana is given by Q d = 280 - P,

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Question:

Demand for parking in the City of Chambana is given by Q_d= 280 - P, and the supply is Q_s= 0.5P - 20, where the price is in cents per car per day and quantity is in hundreds of cars parked per day.

A. Draw a graph of the given demand and supply curve and label it as D₀ and S₀.

B. Indicate numerically all relevant intercepts for your demand and supply curves on your graph.

C.Find the short run equilibrium price and quantity in this market and label the numbers you found on the graph.

D. State your equilibrium price and quantity under your graph; be careful in correctly using the units of measurement indicated in the directions for this question.

Now, suppose that in order to fund improvements to the city's parking garage, the city institutes a tax of 30 cents per unit of parking sold.

E. Depict the effect of the tax by drawing an effective supply curve and label it as S₁. Clearly show the direction of the shift and label the exact dollar amount by which it shifts.

F. Indicate numerically all relevant intercepts for your demand and supply curves on your graph.

G. Find the equilibrium price consumers pay, price producers receive, and quantity traded after the tax is imposed and label them on the graph.

H. State your equilibrium price consumers pay, price producers receive, and quantity traded after the tax is imposed under your graph; be careful in correctly using the units of measurement indicated in the directions for this question.

I. What is the incidence of the tax on consumers and producers? Please show the incidence graphically.