Question

Demand for novels is given by Dp) = 60.0 - 1.0p , and the supply function is S(p) = 3.0p. Give all answers to one decimal. 2nd attempt Part 1 (1.3 points) See Hint What is the equilibrium price for novels? $ 15 What is the equilibrium quantity? 45 Part 2 (2 points) See Hint Suppose a $1 per-unit tax is imposed on buyers of novels. Find the equilibrium price buyers pay, the price sellers receive, and the quantity with the tax. Buyers pay $ Sellers receive $ novels are sold. Part 3 (0.7 point) See Hint Would the answer to Part 2 be different if the tax were charged to sellers instead of buyers? Choose one: • A. yes B. no C. not enough information to say

Answer 1

Part 1 is correctly solved

Part 2. Here the demand is Q = 60 - 1(P + 1) or Qd = 59 - P.

At the new equilibrium we have

59 - P = 3P

P = 59/4 = 14.75

Buyers pay = 15.75

Sellers receive = 14.75

Quantity = 44.25 novels

Part 3. NO.

This is because the tax burden depends on the elasticity of demand and supply not on whom the tax is imposed