Consider the market for butter in Saudi Arabia. The demand and supply relations are given as...

Consider the market for butter in Saudi Arabia. The demand and supply relations are given as follows:

Demand: QD = 12 - 2P

Supply: Qs = 3P - 3.

P is the price of butter.

Suppose government imposes a price ceiling of SAR1 per unit on butter. Calculate: Excess demand or excess supply of butter .
Suppose the government imposes a tax of 1 (SAR) per unit of butter on the suppliers. Calculate:
Government revenue ____________.

Expert Solution

Rahul Sunny answered 2 years ago

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