Question: The demand for Patsy s pizza in New York is described by the demand function xd = 1 5 0 0 2 0 p .

The demand for Patsys pizza in New York is described by the demand function xd =150020p. The supply function is xs =30p. The government charges a tax of $5 per pizza. If the tax is fully salient to consumers ( =0), what will be the (1) equilibrium after-tax price that consumers pay, (2) the equilibrium quantity, (3) tax incidence on consumers and producers, (4) consumer surplus, (5) producer surplus, (6) government revenue, and (7) deadweight loss? If the tax is not at all salient to consumers ( =1), what will be the (1) equilibrium after-tax price that consumers pay, (2) the equilibrium quantity, (3) tax incidence on consumers and producers, (4) consumer surplus, (5) producer surplus, (6) government revenue, and (7) dead-weight loss? If the tax is 50% salient to consumers ( =0), what will be the (1) equilibrium after-tax price that consumers pay, (2) the equilibrium quantity, (3) tax incidence on consumers and producers, (4) consumer surplus, (5) producer surplus, (6) government revenue, and (7) deadweight loss?

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