The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are. The government decides to: a) Impose a 25% Tax on X b) Impose a 5 Rs /unit Tax on Y c) Give a 10% subsidy on good z Analyze the impact of each of these policies separately on equilibrium prices and quantities. Analyze the impact of each of these policies separately on equilibrium prices and quantities. Provide theoretical justification (using diagrams) of all results obtained
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are. The government decides to: a) Impose a 25% Tax on X b) Impose a 5 Rs /unit Tax on Y c) Give a 10% subsidy on good z Analyze the impact of each of these policies separately on equilibrium prices and quantities. Analyze the impact of each of these policies separately on equilibrium prices and quantities. Provide theoretical justification (using diagrams) of all results obtained
Chapter5: Markets In Motion And Price Controls
Section: Chapter Questions
Problem 10P
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The demand and supply functions for three (03) goods are given as follows:
Dx = 100-3Px+Py+3Pz
Dy = 80+Px-2Py-Pz
Dz = 120+3Px-Py-4Pz
Sx = -10+Px
Sy = -20+3Py
Sz = -30+2Pz
The
The government decides to:
- a) Impose a 25% Tax on X
- b) Impose a 5 Rs /unit Tax on Y
- c) Give a 10% subsidy on good z
Analyze the impact of each of these policies separately on equilibrium prices and quantities.
Analyze the impact of each of these policies separately on equilibrium prices and quantities.
Provide theoretical justification (using diagrams) of all results obtained
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