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Market demand and supply for cases of beer are given by Q, = 875 - 5P and Q, = 20P. The equilibrium price is P= $35 per case and the equilibrium quantity is Q= 700 cases. Suppose the government decides it wants to use the raise some tax revenue. It levies a tax of $8 per case on beer consumers. Complete parts a through e below. a) What is the equation of the demand curve with the tax included? Let P, be the amount producers will receive. Q =D+ (OP, (Simplify your answers.) b) What is the new, after-tax equilibrium? The after-tax equilibrium price is $ and the quantity is. (Round to two decimal places as needed.) c) What price do consumers now pay? $ (Round to the nearest cent as needed.) d) Who has the larger burden of the tax? Consumers pay $ more than before the tax. Firms receive $ less than before the tax. Therefore, V bear the larger burden. (Round to the nearest cent as needed.) e) What is the deadweight loss due to the tax? (Round to the nearest cent as needed.) firms consumers

Market demand and supply for cases of beer are given by Q, = 875 - 5P and Q, = 20P. The equilibrium price is P= $35 per case and the equilibrium quantity is Q= 700 cases. Suppose the government decides it wants to use the raise some tax revenue. It levies a tax of $8 per case on beer consumers. Complete parts a through e below. a) What is the equation of the demand curve with the tax included? Let P, be the amount producers will receive. Q =D+ (OP, (Simplify your answers.) b) What is the new, after-tax equilibrium? The after-tax equilibrium price is $ and the quantity is. (Round to two decimal places as needed.) c) What price do consumers now pay? $ (Round to the nearest cent as needed.) d) Who has the larger burden of the tax? Consumers pay $ more than before the tax. Firms receive $ less than before the tax. Therefore, V bear the larger burden. (Round to the nearest cent as needed.) e) What is the deadweight loss due to the tax? (Round to the nearest cent as needed.) firms consumers

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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Market demand and supply for cases of beer are given by Q = 875 – 5P and Q, = 20P. The equilibrium price is P= $35 per case and the equilibrium quantity is Q = 700 cases. Suppose the government decides it wants to use the beer market to raise some tax revenue. It levies a tax of $8 per case on beer consumers. Complete parts a through e below. ..... a) What is the equation of the demand curve with the tax included? Let P; be the amount producers will receive. Qq =+ OP: (Simplify your answers.) b) What is the new, after-tax equilibrium? The after-tax equilibrium price is $ and the quantity is (Round to two decimal places as needed.) c) What price do consumers now pay? $ (Round to the nearest cent as needed.) d) Who has the larger burden of the tax? Consumers pay $ more than before the tax. Firms receive $ less than before the tax. Therefore, bear the larger burden. (Round to the nearest cent as needed.) e) What is the deadweight loss due to the tax? $ (Round to the nearest cent as needed.) firms consumers
Transcribed Image Text:Market demand and supply for cases of beer are given by Q = 875 – 5P and Q, = 20P. The equilibrium price is P= $35 per case and the equilibrium quantity is Q = 700 cases. Suppose the government decides it wants to use the beer market to raise some tax revenue. It levies a tax of $8 per case on beer consumers. Complete parts a through e below. ..... a) What is the equation of the demand curve with the tax included? Let P; be the amount producers will receive. Qq =+ OP: (Simplify your answers.) b) What is the new, after-tax equilibrium? The after-tax equilibrium price is $ and the quantity is (Round to two decimal places as needed.) c) What price do consumers now pay? $ (Round to the nearest cent as needed.) d) Who has the larger burden of the tax? Consumers pay $ more than before the tax. Firms receive $ less than before the tax. Therefore, bear the larger burden. (Round to the nearest cent as needed.) e) What is the deadweight loss due to the tax? $ (Round to the nearest cent as needed.) firms consumers
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