**Supply and Demand Analysis with Tax Imposition**Consider the supply and demand functions graphed below. Suppose a tax is imposed such that the after-tax equilibrium quantity is 50 as shown in the graph.**Graph Explanation:**- **Axes:** - Vertical axis (P): Price - Horizontal axis (Q): Quantity- **Demand Curve:** - Downward sloping from a price of 10 to a quantity of 100.- **Supply Curve:** - Upward sloping intersecting the demand curve.- **Equilibrium:** - Initial equilibrium before tax, where demand meets supply. - After-tax equilibrium quantity is adjusted to 50.**Calculations:**- **The amount of the tax is $______ per unit.**- **The amount of tax collected is $______.**- **______% of the tax was paid by consumers.**This representation of supply and demand includes adjustments for taxes impacting equilibrium position and overall market operations.

Tax would shift the supply curve leftward such as new equilibrium quantity is 50 units. At 50 units, new equilibrium price is $5 and price received by sellers is $1Amount of tax = price paid by consumers - price received by sellers = 5 - 1= 4 Tax collected = t*Q = 4*50= 200 Before tax equilibrium price is 2 Tax paid by consumers = 5-2= 3 % of tax paid by consumers = 3*100/4= 75% 75 % of the tax paid by consumers.

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Consider the supply and demand functions graphed below. Suppose a tax is imposed such that the after equilibrium quantity is 50 as shown in the graph. Demand 10 Supply Q 20 50 80 100 The amount of the tax is $ per unit. The amount of tax collected is $ % of the tax was paid by consumers. 5 21

Consider the supply and demand functions graphed below. Suppose a tax is imposed such that the after equilibrium quantity is 50 as shown in the graph. Demand 10 Supply Q 20 50 80 100 The amount of the tax is $ per unit. The amount of tax collected is $ % of the tax was paid by consumers. 5 21

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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