Suppose in a competitive industry the demand curve is Q = 24 - 2P. The supply curve is P = 2+Q/2. (1) What is the market equilibrium price? (2) What is the market equilibrium quantity? (3) A tax of $2 is imposed on producers. What is the market price after the tax is imposed?

Suppose in a competitive industry the demand curve is Q = 24 - 2P. The supply curve is P = 2+Q/2. (1) What is the market equilibrium price? (2) What is the market equilibrium quantity? (3) A tax of $2 is imposed on producers. What is the market price after the tax is imposed?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose in a competitive industry the demand curve is Q = 24 - 2P. The supply curve
is P = 2+Q/2.
(1) What is the market equilibrium price?
(2) What is the market equilibrium quantity?
(3) A tax of $2 is imposed on producers. What is the market price after the tax is
imposed?
(4) What is the deadweight loss from the tax?
(5) What is the rent-seeking loss from the tax?

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