Homework Answers
Answer
Option 3
$8000
========
Before tax equilibrium
Qd=Qs
50000-2000P=-10000+2000P
4000P=60000
P=15
Q=50000-2000*15=20000
after tax equilibrium is at
Qd(with tax)=Qs
50000-2000(P+T)=-10000+2000P
50000-2000P-8000=-10000+2000P
4000P=52000
P=13=after tax price for sellers
Q=50000-2000(13+4)
=16000
==============
deadweight loss =0.5*(change in quantity)*tax
=0.5*(20000-16000)*4
=8000
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