In a perfectly competitive market, the aggregate supply function is given by

? ? (? ) = 150?

.

There are 10 consumers of type 1, each with an individual demand function given by

Q 1 (P)=max{0,270-3P}.

There are also 10 consumers of type 2, each with an individual demand function given by

Q 2 (P)=max{0,150-2P}.

The equilibrium price in this market is P*= .

The equilibrium quantity in the market is Q*= .

The absolute value of the price elasticity of demand at the equilibrium point is The price elasticity of supply at the equilibrium point is S (p)= .

? D (p)=

.

?

Suppose now that the government applies a 48% ad valorem tax on the value of consumption, to consumers.

The new equilibrium price in this market is PD = .

The new equilibrium quantity in the market is Q*= .

The consumers end up paying the producers, of the burden of the tax.

This is because at the initial equilibrium the supply is than the demand.

In a perfectly competitive market, the aggregate supply function is given by QS(P) = 150P There are 10 consumers of type 1, each with an individual demand function given by Q1(P)=max{0,2TO3P}. There are also 10 consumers of type 2, each with an individual demand function given by taP)=max{O,150-2P}. The equilibrium price in this market is P*=|:|. The equilibrium quantity in the market is Q*=|:|. The absolute value of the price elasticity of demand at the equilibrium point is eD(p)=|:|. The price elasticity of supply at the equilibrium point is 83(p)=|:|. Suppose now that the government applies a 48% ad valorem tax on the value of consumption, to consumers. The new equilibrium price in this market is PD=|:|. The new equilibrium quantity in the market is Q*=|:|. The consumers and up paying I: the producers, of the burden of the tax. This is because at the initial equilibrium the supply is I: than the demand