3. Find and show market equilibrium Price and Quantity. Qs = Qd -8 + 6P = 37 3P 9P = 45 P = $5 Qs = -8 + 6P Qs = -8 + 6(5) Qs = -8 + 30 Qs = 22 4. A specific tax of $2 per good. Write the new Supply function and plot the curve labeling it S + Tax. Qs1 = -8 + 6(P 2) Qs1 = -8 + 6P 12 Qs1 = -20 + 6P
Incidence of Taxation Problem
5. Find and show the new market equilibrium Price and Quantity. Qs1 = Qd -20 + 6P = 37 3P 9P = 57 P = $6.33 Qd = 37 3P Qd = 37 3(6.33) Qd = 18.01 or 18 units 6. Show and identify the change in Producer Surplus, Consumer Surplus, Total Welfare Loss and the area of the tax. See me with your worked solutionsneed a graph to show and explain. Also, shows me if you even look at any of the work I post on Weebly!!! 7. Calculate the amount of tax paid by the Consumers and Producers. Consumer Incidence (New Equilibrium Price Original Equilibrium Price) x New Quantity ($6.33 - $5) x 18 $23.94 Producers Incidence (Original Equilibrium Price Price Producer Receives) x New Quantity ($5 ($6.33 - $2)) x 18 ($5 - $4.33) x 18 0.77 x 18 $13.86 8. Calculate the Total Revenue earned by Producers a. Before the tax. Total Revenue = (Original Price Equilibrium x Original Quantity Equilibrium) Total Revenue = $5 x 22 Total Revenue = $110 b. After the tax. Total Revenue = ((New Equilibrium Price tax) x New Equilibrium Quantity) Total Revenue = ($6.33 - $2) x 18 Total Revenue = $4.33 x 18 Total Revenue = $77.94