Question

border. Question 1. [11 marks] The graph shows the supply and demand curves. Suppose after a tax is imposed, the quantity traded decreases to 50. Answer the following questions. a. [1 mark) What was the equilibrium price in this market before the tax? b. [2 marks] What is the amount of the tax (per unit)? c. [2 marks) How much of the tax will the buyers bear? d. [2 marks) How much of the tax will the sellers bear? e. [1 mark] How much will the buyer pay for the product after the tax is imposed? [1 mark] How much will the seller receive after the tax is imposed? [2 marks) As a result of the tax, how much the quantity traded decreases by?

Answer 1

- Quantity 0 - 50 60 = 4) The equilibinum is at point E before the tax where I demand and supply curve intersed". E The price corresponding to é is & - quantity corresponding to E. is to So, eguidlibinom price po= $6; equielile pentru a60 bay After that the Quantity is so pd (price paid by consumer at 50) = 47 p(price received by seller at 50) =$3 So, tux = pd ps = 7-3-84 / unit o tux buyers bear = Pl_p" 1-6=41 di tax sellera beer apo_ps = 6-3= $3. . e) Price poid by by yers=87; f price seller receive = $3. 124mer