2- The demand curve for a good is q = 100 p/c where c is a constant and c ≥ 0. The supply curve for the good is q=10+p. A quantity tax of t=$10 per unit is imposed on this product. a. By how much will the price of the product rise? b. What are the maximum and minimum possible changes in price? C. What is the producer's share of the tax? d. Find the elasticity of demand at p=10. (Assuming c≥ 0.1).

2- The demand curve for a good is q = 100 p/c where c is a constant and c ≥ 0. The supply curve for the good is q=10+p. A quantity tax of t=$10 per unit is imposed on this product. a. By how much will the price of the product rise? b. What are the maximum and minimum possible changes in price? C. What is the producer's share of the tax? d. Find the elasticity of demand at p=10. (Assuming c≥ 0.1).

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

Do all 4 parts otherwise none

2- The demand curve for a good is q = 100 p/c where c is a constant and c ≥ 0. The supply
curve for the good is q=10+p. A quantity tax of t=$10 per unit is imposed on this product.
a. By how much will the price of the product rise?
b. What are the maximum and minimum possible changes in price?
C. What is the producer's share of the tax?
d. Find the elasticity of demand at p=10. (Assuming c≥ 0.1).

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Step 1: Define Tax.

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Step 2: Calculate price increase of the product.

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Step 3: Determine maximum and minimum possible changes in price.

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Step 4: Calculate producer's share of the tax.

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Step 5: Calculate elasticity of demand at p=10.

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