Suppose you are given the following information: Qs =100+3P Qd =400–2P where Qs is the quantity supplied, Qd is the quantity demanded and P is price. a. From this information compute equilibrium price and quantity. b.Now suppose that a tax is placed on buyers so that Qd=400–(2P+T)where T is taxes. If T = 15, solve for the new equilibrium price and quantity. (Note: You are solving for the equilibrium price for sellers and buyers).

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Suppose you are given the following information:
Qs =100+3P Qd =400–2P
where Qs is the quantity supplied, Qd is the quantity demanded and P is price.
a. From this information compute equilibrium price and quantity.

b.Now suppose that a tax is placed on buyers so that Qd=400–(2P+T)where T is taxes. If T = 15, solve for the new equilibrium price and quantity. (Note: You are solving for the equilibrium price for sellers and buyers).

c. The income elasticity of Abigail’s demand for CDs is 0.75. For Abigail Cds are a normal good or an inferior good? Explain your answer.

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