The demand for a commodity is given by QD = 75 – 2P, and the supply by QS = 3 + P. What are the equilibrium price and quantity? If a tax of $3 per unit is imposed, what will be the price and quantity after the tax?

The demand for a commodity is given by QD = 75 – 2P, and the supply by QS = 3 + P. What are the equilibrium price and quantity? If a tax of $3 per unit is imposed, what will be the price and quantity after the tax?

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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Taxation results in an increase in equilibrium price and a decline in equilibrium quantity.

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