In: Economics
Per-unit Tax:
The Isoland widget market has the following supply and demand functions:
Supply: P = 20 + 2QS
Demand: P = 160 − 2QD
Suppose a per-unit tax of $40 is imposed on this market.
Draw a picture and calculate: (a) Price consumers pay (b) price producers receive (c) Total tax revenue (d) Consumer surplus (e) Producer Surplus (f) Consumer tax burden (g) Producer tax burden (h) Total welfare (i) Deadweight loss