The demand for cabbage is given by QD = 2,000 – 300P, and the supply is...

The demand for cabbage is given by QD = 2,000 – 300P, and the supply is given by QS = -100 + 100P.

a. Graph the supply and demand curves and show the equilibrium price and quantity. On the same graph show the effect of a $2.00 per-unit sales tax on the market equilibrium and also the tax burden for consumers and producers.

b. Calculate the consumers’ tax burden.

c. Calculate the producers’ tax burden.
Hint: Solve the equilibrium condition with and without the tax.

Expert Solution

Rahul Sunny answered 2 years ago

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