Suppose that a market has the following demand and supply functions (normal) : Qd=10-p and Qs=2P-2...

Suppose that a market has the following demand and supply functions (normal) : Qd=10-p and Qs=2P-2

Graph the demand and supply

1. what is the equilibrium price

2. what is the equilibrium quantity

3. what is total surplus at this equilibrium

4. If the government imposed a $3/unit excise tax on producers in this market, what would be the new price that consumers pay?

5. If the government imposed a $3/unit excise tax on producers in this market, what would be the new price that producers receive?

6. If the government imposed a $3/unit excise tax on producers in this market, what would be the DWL?

7. If the government imposed a $3/unit excise tax on producers in this market, what would be the value of consumer surplus?

8. If the government imposed a $3/unit excise tax on producers in this market, what would be the value of producer surplus?

Solutions

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Rahul Sunny answered 1 year ago

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