Say in a market we have Demand is P = 5 – 0.005Q Supply is P = 0.00125Q a-you will have a graph with price on the vertical axis and quantity on the horizontal axis for most parts of this problem. You will want to show intercept values and equilibrium values with the specific values from the problem (when you graph the supply show it go out at least to the same level of Q as the Q intercept for the demand curve). b-what are the equilibrium price and quantity traded in the market? c-say the government levies an excise tax in the market of 50 cents that renders the supply to now be P = .00125Q + 0.5 (essentially the supply curve shifts up by 50 cents at each quantity). What are the new equilibrium price and quantity traded in the market with this excise tax? d-did the market price increase by as much as the 50 cent tax? (compare the market price increase with the amount of the tax of 50 cents) e-what is then loss in consumer surplus from the tax? Do consumers like excise taxes? f-what is the elasticity of demand at each equilibrium price and quantity traded combination?
Say in a market we have
Supply is P = 0.00125Q
a-you will have a graph with
most parts of this problem. You will want to show intercept values and equilibrium values with
the specific values from the problem (when you graph the supply show it go out at least to the
same level of Q as the Q intercept for the demand curve).
b-what are the
c-say the government levies an excise tax in the market of 50 cents that renders the supply to
now be P = .00125Q + 0.5 (essentially the supply curve shifts up by 50 cents at each quantity).
What are the new equilibrium price and quantity traded in the market with this excise tax?
d-did the market price increase by as much as the 50 cent tax? (compare the market price
increase with the amount of the tax of 50 cents)
e-what is then loss in
f-what is the
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