Consider the following demand Qd = 140 - 3P and supply QS = 20 +20P for lunch at the Mountain View Golf and Country Club. a) Draw the demand and supply curves, and calculate the equilibrium price and quantity. b) The provincial government has imposed a sales tax of 12 percent on restaurant meals. Show how the above market is affected, and the new equilibrium price and quantity. (calculation is necessary). c) Explain and illustrate how the consumer's welfare is affected. Specifically show how the (1) consumer surplus, (2) total value, and (3) marginal value change.

Consider the following demand Qd = 140 - 3P and supply QS = 20 +20P for lunch at the Mountain View Golf and Country Club. a) Draw the demand and supply curves, and calculate the equilibrium price and quantity. b) The provincial government has imposed a sales tax of 12 percent on restaurant meals. Show how the above market is affected, and the new equilibrium price and quantity. (calculation is necessary). c) Explain and illustrate how the consumer's welfare is affected. Specifically show how the (1) consumer surplus, (2) total value, and (3) marginal value change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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