Suppose the original before-tax demand curve for boks is P = 100 -2Qd. Suppose further that supply is P = 5 + 3Qs. Now suppose a quantity tax of $5 per unit is imposed on consumers.
A) What is the before-tax equilibrium price and quantity?
B) What is the after-tax equilibrium quantity? What is the price received by producers? What is the price paid by consumers?
C) How much tax revenue is raised?
D) Calculate the excess burden created by the tax.
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Suppose the original before-tax demand curve for boks is P = 100 -2Qd. Suppose further that...
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Tax Problem:
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the supply curve is given by
Q S = -2 + P.
a) (4 points) Find the equilibrium price and quantity in the
absence of any government intervention.
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