Question

23. The inverse demand function for eggs is p = 84 - 99, where q is the number of cases of eggs. The inverse supply is p = 7 + 2q. In the past, eggs were not taxed, but now a tax of 33 dollars per case has been introduced. What is the effect of the tax on the quantity of eggs supplied? a. Quantity drops by 2 cases. b. Quantity drops by 3 cases. c. Quantity drops by 6 cases d. Quantity drops by 4 cases e. None of the above.

Answer 1

ANSWER:

(B)( Quantity drops by 3 cases.)

For pre-charge amount, we liken request and flexibly of eggs (harmony condition)

for example 84-9q = 7+2q => q = 77/11 = 7 instances of eggs.

After an tax of $33 per case is forced, the flexibly bend will move leftwards for example cost to makers increments.

Flexibly bend becomes : p =7+2q+33 [ cost per case is expanded by the expense amount ]

Comparing the new gracefully with the old interest .

we get 84-9q = 7+2q +33 => q = 44/11 = 4.

Change amount = 7-4 = 3.

In this way, correct (b) is right

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