Question: Suppose that the demand for a good is Qd = A - BP and the supply is QS= RP - S, where A, B, R,

Suppose that the demand for a good is Qd = A - BP and the supply is QS= RP - S, where A, B, R, and S are all positive numbers. Derive a function P*(T) describing the equilibrium price as a function of the specific tax T the government places on the good. What is the derivative of the equilibrium price with respect to T? (This is known as the "pass-through rate" of the tax.) How does it depend on A, B, R, and S?

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