b) Suppose that in a certain market, the demand function for a product is given 10p + q = 3000 and the supply function is given by 35p-q = 80 , where p is the pr per unit in dollars and q is the quantity produced. If the government levies a tax of Ri per item on the supplier, who passes the tax on to the consumer as a price increase: i. Find the equilibrium price and quantity after the tax is levied. ii. If we assume there is no tax, find the new equilibrium price and quantity.
b) Suppose that in a certain market, the demand function for a product is given 10p + q = 3000 and the supply function is given by 35p-q = 80 , where p is the pr per unit in dollars and q is the quantity produced. If the government levies a tax of Ri per item on the supplier, who passes the tax on to the consumer as a price increase: i. Find the equilibrium price and quantity after the tax is levied. ii. If we assume there is no tax, find the new equilibrium price and quantity.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter5: Elasticity Of Demand And Supply
Section5.A: Appendix: Price Elasticity And Tax Incidence
Problem 1AQ
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