Question

CON 305 Chapter Three-Taxes Name ad each question carefully and provide the requested information in the provided space, making sure you show mulas, calculations, graphs, and answers (label everything correctly). The market for cigars is characterized by ad cigars and Q measures boxes per hour. 10- 0.25P and Qs - 0.15P, where Pis the price per box of a. What is the equation for the inverse demand curve? b. What is the equation for the inverse supply curve? c. What is the choke price for the demand curve? d. What is the choke price for the supply curve? What is the consumer surplus before any cigar tax? f. What is the producer surplus before any cigar tax? Draw and label the demand curve, the supply curve, the pre-tax consumer surplus and pre-tax producer surplus.

I need help on the (G) Draw and Label the demand curve, the supply curve, the pre-tax consumer surplus and pre-tax producer surplus, PLEASE! Thank you!

Answer 1

Q^d = 10 - 0.25 p Q^s = 0.15 p for equilibrium Q^d = Q^s 10 - 0.25 p = 0.15 p 10 = 0.40 p 10/014 = p p = 25 \r\n consumer surplus = > 1/2 times b times h (area below the demand curve & above the price line) = > 1/2 times 3.75 times 15 = > 28.125 producer surplus = > 1/2 times 3.75 times 25 area above the supply curve & below the price line) = > 46.875 hence consumer surplus pretax = 28.125 & producer surplus pretax = 46.875