Question

Question 1 1 pts The demand curve in a competitive market is given by P = 60 - 404, where Pis price and Qd is the quantity demanded. The supply curveis P = 6Q5, where Qs is the quantity supplied. The government imposes a $20 per-unit tax to be legally paid by consumers. Compared with the pre-tax equilibrium: Consumers pay an extra $20 per unit, Suppliers receive the same amount per unit. Consumers pay an extra $12 per unit, Suppliers receive $8 less per unit. Consumers pay an extra $10 per unit, Suppliers receive $10 less per unit. Consumers pay an extra $8 per unit, Suppliers receive $12 less per unit. Consumers pay an extra $4 per unit, Suppliers receive $16 less per unit.

Answer 1

Answer

before tax, equilibrium is at Qd=Qs

60-4Q=6Q

10Q=60

Q=6

P=6*6=36

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After tax,

Demand curve is:

P=60-4Q

Deducting tax

P=60-4Q-20

P=40-4Q

Equating with supply

40-4Q=6Q

10Q=40

Q=4

Price seller receives =40-4*4=24

Price buyer pay =price seller receives +per unit tax=24+20=44

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Consumer tax pay =price after tax buyer pay - before tax price

=44-36=$8

Producer pay = per unit tax - consume tax pay =20-8=$12

The tax consumer pay is $8 ad producer pay is $12

Option 4