The elasticity of demand for home computersis -2.5, the elasticity of demand for businesscomputers is -.90, and the elasticity of supplyfor computers for both purposes is 1.a. A per-unit tax of $200 is imposed on thesuppliers of computers. How much does thegross price increase in each market? [Hint:first find the tax incidence/shares.]b. Suppose the untaxed market equilibrium priceand quantity in the home computer marketare $850 and 10 million, respectively. In thebusiness market, the untaxed marketequilibrium price and quantity are $1200 and15 million, respectively. What is thedeadweight loss of the $200 tax?Answer part B please!Hand written asap

Elasticity refers to a term used in economics to describe how one economic variable reacts to…

. Suppose the untaxed market equilibrium price and quantity in the home computer market are $850 and 10 million, respectively. In the business market, the untaxed market equilibrium price and quantity are $1200 and 15 million, respectively. What is the deadweight loss of the $200 tax?

. Suppose the untaxed market equilibrium price and quantity in the home computer market are $850 and 10 million, respectively. In the business market, the untaxed market equilibrium price and quantity are $1200 and 15 million, respectively. What is the deadweight loss of the $200 tax?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The elasticity of demand for home computers
is -2.5, the elasticity of demand for business
computers is -.90, and the elasticity of supply
for computers for both purposes is 1.
a. A per-unit tax of $200 is imposed on the
suppliers of computers. How much does the
gross price increase in each market? [Hint:
first find the tax incidence/shares.]
b. Suppose the untaxed market equilibrium price
and quantity in the home computer market
are $850 and 10 million, respectively. In the
business market, the untaxed market
equilibrium price and quantity are $1200 and
15 million, respectively. What is the
deadweight loss of the $200 tax?
Answer part B please!
Hand written asap

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