Answered: Given the following information QD =…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

_{Given the following information}

Q_D= 240-5P

Q_{S= P}

_WhereQ_{D is the quantity demanded, Qs is the quantity supplied and P is the price. Suppose the government decides to impose a tax of $12 per unit on sellers in this market. Determine the seller’s price after tax.}

Expert Solution

Step 1

Government impose tax on the goods and services on the market to generate revenue. The tax on goods and services are shared by the sellers and buyers.

In the above question, the quantity demanded (Q_D) and quantity supplied (Q_S) is given as,

$Q_{D} = 240 - 5 P Q_{S} = P$

P is the price.

Now, if government imposes a tax of $12 per unit on sellers in this market.

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