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September 21, 2014

Homework Help: Microeconomics

Posted by Diane on Monday, July 28, 2008 at 5:25pm.

This is a 5 part question; (a-e)The question reads: Suppose that a market is described by the following supply & demand equations: Qs=2P & Qd=300-P
a) Solve for the equalibrium price & quantity. (I think I understand this process.)
b)Suppose that a tax of T is placed on buyers so the new demand equation is:
Qd=300-(P+T). Solve for new equalib. What happens to the price received by seller, the price paid by buyers, & qty sold?
c)Tax revenue is T x Q. Use your answer to part (b) to solve for tax revenue as a function of T.
d) Graph the DWL
e) Gov't levies a tax on good of $200/unit. Is this a good policy? Why/Why not? Can you propose a better policy?

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