d. If the government imposed a per unit tax of 120 cents on each bottle of alcohol, what would be the new market equilibrium? [Hint: With per unit tax on each bottle of alcohol, the new supply curve becomes Qs = (P/2) - 60] [10 marks]

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Jarrod RobelLv2

22 Nov 2018

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The government is considering three alternative policies to restrict alcohol drinking. The supply and demand curves are as follows: Demand: Qd = 300 - P Supply: Q:=P/2 where P is measured in cents and Q is measured in millions of bottles per month. a. Graph the supply and demand curves. Identify the P and Q intercepts for the demand curve and the P and Q intercept for the supply curve. Solve for the equilibrium price and quantity. Show the equilibrium in the graph. [10 marks]