Question

3. Assume that there is a $14 tax imposed on the consumer, find the new equilibrium price and quantity, р Find the portion of the tax paid by the producer and the portion of the tax paid by the consumer, and Consumer Producer Find the tax revenue generated for the government. Total Tax 4. Which scenario is best for the government and why?

Answer 1

page: 0 on the consumer- Now = 200 - ps - 3000 5 1000 faconding to the given problem Assume that there is $ 14 imposed new equilibrium panice and quantity $14 tox imposed on the buyer price paid by the buyer after tax Ро: Ps + 14 ( Tax) At equilibrium 48000 - 100 po 1001ps+14) = 200ps 300 ps Ps = 49600/300 165.33 Similarly Po - 179,33 → equilibrium quantity after tax + equilibrium porice after tax = [149.33. Portion of the tax paid by the producer and portion & the tax paid by the consumen portion of tax paid by 49600 = 30067 Consumer = 179.33-190 =9.33 portion of tax paid by producer = 140-165.33 4.67 Taz revenue generated from the government 30069 x 14 If 420938