Suppose a competitive market has the following demand function and supply function: Qd = 200 - 2P
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Question:
Suppose a competitive market has the following demand function and supply function:
Qd = 200 - 2P
Qs = 20 + 3P
a) Determine the equilibrium price and quantity in this market.
b) Suppose the government imposes a per-unit tax of $4 on producers. Determine the new equilibrium price and quantity, the amount of tax revenue collected by the government, and the deadweight loss of the tax.
c) Suppose instead that the government imposes a lump-sum tax of $400 on producers. Determine the new equilibrium price and quantity, the amount of tax revenue collected by the government, and the deadweight loss of the tax.
Related Book For
Mathematical Applications for the Management Life and Social Sciences
ISBN: 978-1305108042
11th edition
Authors: Ronald J. Harshbarger, James J. Reynolds
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