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In: Economics

Joe is looking to expand his tiger collection. The market for white tigers has the following...

Joe is looking to expand his tiger collection. The market for white tigers has the following market demand and market supply functions:

D(P) = 200 − 2P and S(p) = 6P − 120

a. Graph the market supply and demand curves and solve for the equilibrium price and quantity of white tigers. Label your graph and remember to put price on the y-axis.

b. A tax of $10 per tiger is imposed on suppliers. What is the new market price and quantity as a result of the tax?

c. Find the value of consumer surplus, producer surplus, tax revenue, and economic welfare after the tax was implemented.

d. Finally calculate the deadweight loss created by the tax

Solutions

Expert Solution

Rahul Sunny answered 5 months ago
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