Suppose a market is characterized by the following: QD = 1,500-3P QS = -500+2P A) Determine...

Suppose a market is characterized by the following:

QD = 1,500-3P

QS = -500+2P

A) Determine the equilibrium price and quantity .

B) Graph the equilibrium price and quantity in part A)

C) Suppose the government imposes a per-unit tax of 5 (ie. 5 dollars in tax on every unit

purchased) on buyers. Solve for the new equilibrium price and quantity. HINT: There are

two prices and one quantity to solve for. .

D) Determine the total amount of tax revenue collected by the per-unit tax in B) .

Expert Solution

Rahul Sunny answered 8 months ago

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