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The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72  Qx= 68.72 Py= 23.66  Qy= 50.98 Pz= 60.42  Qz= 90.84 The government decides to: a) impose a 25% Tax on X b) impose a 5 Rs/unit Tax on Y c) give a 10% subsidy on good z When policies (a,b), (b,c), and (a,b,c) are jointly implemented. Analyze the impact on equilibrium prices and quantities. Which policy choice is best? Why?

The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72  Qx= 68.72 Py= 23.66  Qy= 50.98 Pz= 60.42  Qz= 90.84 The government decides to: a) impose a 25% Tax on X b) impose a 5 Rs/unit Tax on Y c) give a 10% subsidy on good z When policies (a,b), (b,c), and (a,b,c) are jointly implemented. Analyze the impact on equilibrium prices and quantities. Which policy choice is best? Why?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The demand and supply functions for three (03) goods are given as follows:

Dx = 100-3Px+Py+3Pz

Dy = 80+Px-2Py-Pz

Dz = 120+3Px-Py-4Pz

Sx = -10+Px

Sy = -20+3Py

Sz = -30+2Pz

The equilibrium prices and quantities of all three goods are:

Px= 78.72  Qx= 68.72

Py= 23.66  Qy= 50.98

Pz= 60.42  Qz= 90.84

The government decides to:

a) impose a 25% Tax on X

b) impose a 5 Rs/unit Tax on Y

c) give a 10% subsidy on good z

When policies (a,b), (b,c), and (a,b,c) are jointly implemented. Analyze the impact on equilibrium prices and quantities. Which policy choice is best? Why?

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