52) Suppose that a tax of 8 dollars per tuba is placed on this market. As a result the supply curve expressed as a function of the price paid by the buyers shifts up by 8 dollars, and its equation is T = P - 18. At the new equilibrium the price paid by the buyers and the price received by the sellers will be: A) 26, 18 B) 30,22 C) 16,8 D) 42, 36 E) 20, 12

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Hubert KochLv2

13 Apr 2018

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If supply and demand in a market are given by the following equations: Qs = 250P Qp = 1500 - 125P Suppose the government imposes a tax on buyers and it causes the new price paid by buyers in the market to be $8. (Hint: A tax graph can help you visualize how to answer the remaining questions] e) (2 points) Solve for the price received by sellers. Use your graph to think about this]

Suppose that a market is described by the following supply and demand equations:

QS= 2P

QD = 300P

a. Solve for the equilibrium price and the equilibrium quantity.

b. Suppose that a tax of T is placed on buyers so the new demand equation is QD = 300 (PT). Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold?

c. Tax revenue is T×Q. Use your answer to part (b) to solve for tax revenue as a function of T.
d. The deadweight loss of a tax is the area of the triangle between the supply and demand curves. Recalling that the area of a triangle is , solve for deadweight loss as a function of T.

(Hint: Looking sideways, the base of the deadweight loss triangle is T, and the height is the difference between the quantity sold with the tax and the quantity sold without the tax.)

yellowmule81

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