b) Suppose that in a certain market, the demand function for a product is given by10p + q = 3000 and the supply function is given by 35p-q = 80 , where p is the priceper unit in dollars and q is the quantity produced. If the government levies a tax of RM6per item on the supplier, who passes the tax on to the consumer as a price increase:i.Find the equilibrium price and quantity after the tax is levied.ii. If we assume there is no tax, find the new equilibrium price and quantity.

Answered: Image /qna-images/answer/34cb4eeb-80b3-4c46-afad-a9160a96ab03.jpg

b) Suppose that in a certain market, the demand function for a product is given 10p + q = 3000 and the supply function is given by 35p-q = 80 , where p is the pr per unit in dollars and q is the quantity produced. If the government levies a tax of Ri per item on the supplier, who passes the tax on to the consumer as a price increase: i. Find the equilibrium price and quantity after the tax is levied. ii. If we assume there is no tax, find the new equilibrium price and quantity.

b) Suppose that in a certain market, the demand function for a product is given 10p + q = 3000 and the supply function is given by 35p-q = 80 , where p is the pr per unit in dollars and q is the quantity produced. If the government levies a tax of Ri per item on the supplier, who passes the tax on to the consumer as a price increase: i. Find the equilibrium price and quantity after the tax is levied. ii. If we assume there is no tax, find the new equilibrium price and quantity.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section5.A: Appendix: Price Elasticity And Tax Incidence

Problem 1AQ

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