I. The short-run market demand and supply curves for good X are as follows: QD = 20 - 4P Qs = 7+ 2.5P 1. Find the equilibrium price and quantity before the imposition of the tax. 2. What is the price actually paid by the demanders (Pd) due to a quantity or specific tax of $1 per unit collected from the buyers? 3. What is the price actually received by the suppliers (Ps) due to a quantity or specific tax of $1 per unit collected from the buyers? 4. What is the after- or post-tax quantity? 5. What is the total revenue after the imposition of the quantity or specific tax? 6. How much of the tax do consumers pay (in percent)? 7. How much of the tax do producers pay (in percent)?
I. The short-run market demand and supply curves for good X are as follows: QD = 20 - 4P Qs = 7+ 2.5P 1. Find the equilibrium price and quantity before the imposition of the tax. 2. What is the price actually paid by the demanders (Pd) due to a quantity or specific tax of $1 per unit collected from the buyers? 3. What is the price actually received by the suppliers (Ps) due to a quantity or specific tax of $1 per unit collected from the buyers? 4. What is the after- or post-tax quantity? 5. What is the total revenue after the imposition of the quantity or specific tax? 6. How much of the tax do consumers pay (in percent)? 7. How much of the tax do producers pay (in percent)?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:I. The short-run market demand and supply curves
for good X are as follows:
QD = 20 - 4P
Qs = 7+ 2.5P
1. Find the equilibrium price and quantity
before the imposition of the tax.
2. What is the price actually paid by the
demanders (Pd) due to a quantity or
specific tax of $1 per unit collected from
the buyers?
3. What is the price actually received by the
suppliers (Ps) due to a quantity or
specific tax of $1 per unit collected from
the buyers?
4. What is the after- or post-tax quantity?
5. What is the total revenue after the
imposition of the quantity or specific tax?
6. How much of the tax do consumers pay
(in percent)?
7. How much of the tax do producers pay
(in percent)?
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