The demand function for Product X is Qd 100 2P and its supply function is Qs 20 P where P is the price of Product X in dollars while Qd is the quantity demanded and Qs is the quantity supplied (both expressed in thousands of units) Part 1 What are the equilibrium price and quantity What is the consumer surplus in the market for Product X What is the producer surplus in the market for Product X What is the total surplus in the market for Product X Part 2 Assume that the government decide to impose a tax of $6 on the price of each Product X that consumers purchase What are the new equilibrium price and quantity What is the new consumer surplus in the market for Product X What is the new producer surplus in the market for Product X What is the new total surplus in the market for Product X Is the new market equilibrium efficient Why Why not (

Question: The demand function for Product X is Qd = 100 2P and its supply function is Qs = -20 + P where P is

The demand function for Product X is Qd = 100 – 2P and its supply function is Qs = -20 + P where P is the price of Product X in dollars while Qd is the quantity demanded and Qs is the quantity supplied (both expressed in thousands of units).

Part 1

What are the equilibrium price and quantity?
What is the consumer surplus in the market for Product X?
What is the producer surplus in the market for Product X?
What is the total surplus in the market for Product X?

Part 2

Assume that the government decide to impose a tax of $6 on the price of each Product X that consumers purchase.

What are the new equilibrium price and quantity?
What is the new consumer surplus in the market for Product X?
What is the new producer surplus in the market for Product X?
What is the new total surplus in the market for Product X?
Is the new market equilibrium efficient? Why? Why not? (

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