Question

11 Question (3 points) In a small city, Uver, a new ride service, has become very popular with the younger generation. The inverse demand for Uver rides is given by p = 50.00 - Copy where is the number of rides demanded and p is the market price per ride. The inverse supply of rides is given by p = 25.00 + os The local government in this small city is concerned that young people will walk less, which will have a negative effect on their health. The government is, therefore, considering charging Uver drivers a tax of $9.00 per ride. 1st attempt Part 1 (1 point) See Hint If no tax is put in place, the equilibrium price is $ per Uver ride. Part 2 (1 point) See Hint With the tax in place, the price paid by buyers per Uver ride will increase to $ Part 3 (1 point) See Hint With the tax in place, the after-tax price per ride received by Uver drivers will be $

Answer 1

Here , the Equilibrium price without tax can be calculated by equating the demand and supply.

After tax, it doesn't matter whether the tax is imposed on buyers or sellers, the equilibrium will be the same and the incidence will also be the same. Therefore we can assume the tax to be imposed either on buyers or sellers. And then calculate the equilibrium price.

AMl P: 35+as Tax $9 2 del 600 -2D Ps 4p-100 @D 600-12p euitibrium AL bo0 12p up - 100 16P 100 16 Equitibrium pic when No Tax in place in place Tax is wnin N impoud on - function the the tax that A SSume wil charge the demand antumes thenyore So ao Ptt to

P+4 50-D 1p 108 600-o b 600-103 - 12 P ds Yp-1aD and 92-19P Eauitisrium At Ll0 P 31 499-1ap p -1o0 59a= 16P Equitibrium poicu is 100 Euiy 31. Pice is Equiuib ium Neuw 31t 4 46 31 tax the PHic padid by touyes wi inchease to 446 muuyors received uoiu be 37 uver deivers and paice