The market of candy is described by Ys = -8 +2P Yd=32-0.5P Which results in the market-optimal price of P-8 and output Y=16. The government decides that the socially-optimal output of candy is 4. To achieve that, it decides to impose an excise tax on consumers such that the effective price they feel (the cost of candy plus the tax) is so high they only want to buy 4 pieces. In your written work, modify the supply and demand functions and find the resulting market price. Graph the new market equilibrium

The market of candy is described by Ys = -8 +2P Yd=32-0.5P Which results in the market-optimal price of P-8 and output Y=16. The government decides that the socially-optimal output of candy is 4. To achieve that, it decides to impose an excise tax on consumers such that the effective price they feel (the cost of candy plus the tax) is so high they only want to buy 4 pieces. In your written work, modify the supply and demand functions and find the resulting market price. Graph the new market equilibrium

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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