Following demand and supply functions: Demand: Q 10 - P Supply: Q = P-2 2.1. Find...

 

Transcribed Image Text:

Following demand and supply functions: Demand: Q 10 - P Supply: Q = P-2 2.1. Find the equilibrium price and quantity found in the market. 2.2. Now suppose that the government impose a tax = 2$. What is the amount that will be and sold in the market now? Are they same? 2.3 What is the price that buyers pay? What is the price that sellers receive? 2.4 What is the incidence of the tax? (i.e. what share of the tax revenue does each group pay?) Why is the tax shared this way? How does it relate to the elasticity of demand and the elasticity of supply (at the original equilibrium)? 2.5. What is the dead weight loss from the introduction of the tax? 2.6. What if the law stated that the government tax was placed on producers? Repeat the above. 2.7 Would it matter if the law said the government tax was placed on consumers? Following demand and supply functions: Demand: Q 10 - P Supply: Q = P-2 2.1. Find the equilibrium price and quantity found in the market. 2.2. Now suppose that the government impose a tax = 2$. What is the amount that will be and sold in the market now? Are they same? 2.3 What is the price that buyers pay? What is the price that sellers receive? 2.4 What is the incidence of the tax? (i.e. what share of the tax revenue does each group pay?) Why is the tax shared this way? How does it relate to the elasticity of demand and the elasticity of supply (at the original equilibrium)? 2.5. What is the dead weight loss from the introduction of the tax? 2.6. What if the law stated that the government tax was placed on producers? Repeat the above. 2.7 Would it matter if the law said the government tax was placed on consumers?

Answer rating: 100% (QA)

21 2 DD SS 22 Q 10P Q PR At Eqm Demand becomis 00054 44 10P P2 1... View the full answer