Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Let Q=2P be supply and Q=20-2P be demand . With a tax of 2 the price received by the producer is........
With this question, I know the price received by tge consumer is 6 becuase I just plug the new equilibrium quantity into the demand equation. I reworked all the problems so that P(supply)=1/2Q and P(demand)=10-1/2Q and P(tax)=1/2Q+2. My only question is do I plug the new equilibirum quantity into the supply equaiton with or wihtout the tax? (P=1/2Q or P=1/2Q+2)? I might just be overthinking it, but I just want to double check becuase so I can get a solid understanding of this.
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