The market demand is Qd=12 - 0.04P The market supply is Qs=3.8P + 4 Questions: 1) Calculate the equilibrium qty and price 2) Calculate the elasticity of demand at equilibrium point Supposed each unit is taxed $0.25: 3a) calculate the revenue generated by tax

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter6: Demand And Elasticity
Section: Chapter Questions
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The market demand is Qd=12 - 0.04P

The market supply is Qs=3.8P + 4

Questions:

1) Calculate the equilibrium qty and price

2) Calculate the elasticity of demand at equilibrium point

Supposed each unit is taxed $0.25:

3a) calculate the revenue generated by tax

3b) calculate loss in consumer surplus and the percentage of the burden of the tax paid by consumers.

3c)  calculate loss in producer surplus and the percentage of the burden of the tax paid by producers.

 

 

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