Question: Consider a market with Qd=240 – 6p and Qs=2p. a. What’s consumer surplus? b. What’s producer surplus? c. Now suppose that £4 tax per unit needs to be paid by consumers in the market. What is the tax revenue? * when checking for answers online, I found this (listed below), but I don't understand where they got the 40 from when working out consumer surplus. I think it is the new price but I don't see anything in the question regarding a price change- there is only one price we can work out from equation Qd and Qs, but was wondering if there was a way to get that 40 from the question given- any help would be much appreciated Answers: 1. Qd = Qs gives that 240 – 6p = 2p. Simplifying the equation yields 8p = 240, which gives p*= 30. Plugging P*=30 into either demand or supply gives Q*= 60. CS = 1⁄2 * (40 - 30) * 60 = 300.
Question: Consider a market with Qd=240 – 6p and Qs=2p.
a. What’s
c. Now suppose that £4 tax per unit needs to be paid by consumers in the market. What is the tax revenue?
* when checking for answers online, I found this (listed below), but I don't understand where they got the 40 from when working out consumer surplus. I think it is the new
Answers:
1. Qd = Qs gives that 240 – 6p = 2p. Simplifying the equation yields 8p = 240, which gives p*= 30. Plugging P*=30 into either demand or supply gives Q*= 60.
CS = 1⁄2 * (40 - 30) * 60 = 300.
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