Demand and supply are as follows (25 points): 𝐷𝑒𝑚𝑎𝑛𝑑: 𝑄 = 200 −
Posted: Mon Apr 25, 2022 8:20 am
Demand and supply are as follows (25 points): 𝐷𝑒𝑚𝑎𝑛𝑑: 𝑄 = 200 −
𝑃 𝑆𝑢𝑝𝑝𝑙𝑦: 𝑄 = −25 + 8𝑃
Suppose instead that there is a 50% tax on suppliers.
(i) Show the effect of the tax graphically, labeling the
deadweight loss, the amount of the tax that consumers pay, and the
amount of the tax that producers pay.
(ii) Compute the deadweight loss, the amount of the tax that
consumers pay, and the amount of the tax that producers pay.
𝑃 𝑆𝑢𝑝𝑝𝑙𝑦: 𝑄 = −25 + 8𝑃
Suppose instead that there is a 50% tax on suppliers.
(i) Show the effect of the tax graphically, labeling the
deadweight loss, the amount of the tax that consumers pay, and the
amount of the tax that producers pay.
(ii) Compute the deadweight loss, the amount of the tax that
consumers pay, and the amount of the tax that producers pay.