B The demand and supply functions for a product are: Q=50-3P and Q, =-6+4P, respectively (1) Graph each function on the same diagram. From the graph determine the equilibrium price and quantity. Confirm your answer algebraically. If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation of the supply function to include tax. Graph the supply function and hence determine the equilibrium point when tax is included. What percentage of the () tax is paid by the consumer? Give an interpretation for your results.
B The demand and supply functions for a product are: Q=50-3P and Q, =-6+4P, respectively (1) Graph each function on the same diagram. From the graph determine the equilibrium price and quantity. Confirm your answer algebraically. If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation of the supply function to include tax. Graph the supply function and hence determine the equilibrium point when tax is included. What percentage of the () tax is paid by the consumer? Give an interpretation for your results.
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.11P
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Question
![The demand and supply functions for a product are:
O, = 50 - 3P and O, =-6+4P, respectively
B
(i)
Graph each function on the same diagram. From the graph determine
the equilibrium price and quantity. Confirm your answer algebraícally.
(ii)
If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation
of the supply function to include tax. Graph the supply function and
hence determine the equilibrium point when tax is included. What percentage of the
tax is paid by the consumer? Give an interpretation for your results.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7878e676-fe5a-4a07-8545-02cdd95e109b%2Ff182e2c0-4ef6-4a8b-a7fd-1f4b29a7cc07%2Fuf3hib_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The demand and supply functions for a product are:
O, = 50 - 3P and O, =-6+4P, respectively
B
(i)
Graph each function on the same diagram. From the graph determine
the equilibrium price and quantity. Confirm your answer algebraícally.
(ii)
If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation
of the supply function to include tax. Graph the supply function and
hence determine the equilibrium point when tax is included. What percentage of the
tax is paid by the consumer? Give an interpretation for your results.
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