Answered: a) What is the Equilibrium Price and…

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

a) What is the Equilibrium Price and Equilibrium Quantity

b) If the government imposes a $15 per unit tax on sellers on this good what is the new quantity sold in units, how much will the buyers pay, how much will sellers receive?, and how much will the government receive in tax revenue?

c) What is the price elasticity of demand and over this price change? What about the supply?

d) Based on the elasticities calculated above, who will bear a greater burden from the tax? Why?

Suppose you have the information shown in the table below about the quantity of a good that
is supplied and demanded at various prices.
Price ($)
Qd
Qs
50
180
45
|10
|160
40
20
140
35
30
|120
30
40
100
25
50
80
20
60
60
|15
70
40
|10
80
20
5
90
The supply curve is represented by the equation P = 5 + 0.25Q, and the demand curve by P =
50 - 0.5Q.

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