Suppose the equations below represent the market supply and demand for cellular service. QD = 50 – 0.25P QS = 2P – 76 a. Graph the supply and demand curves, and label the equilibrium quantity and price. b. Calculate the amount of Consumer Surplus and Producer Surplus in this market. c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold. d. Calculate the amount of deadweight loss associated with this per-unit tax.
Suppose the equations below represent the market
QD = 50 – 0.25P
QS = 2P – 76
a. Graph the supply and demand
b. Calculate the amount of
c. Suppose the government enacts a per-unit tax of $9 for each unit sold. Illustrate the effect of this tax in your graph of the market for cellular service, and calculate the new market price and quantity sold.
d. Calculate the amount of
e. Calculate the share of the tax burden that the sellers bear.
f. Briefly explain why there is a relationship between the slopes of the supply and demand curves, and the tax burden on each side of the market.
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