a. Solve for the equilibrium price and the equilibrium quantity. b. Suppose that a tax of Tis placed on buyers, so the new demand equation is QD = 300 – (P + T). Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold? c. Tax revenue is TxQ. Use your answer to part (b) to solve for tax revenue as a function of T.

a. Solve for the equilibrium price and the equilibrium quantity. b. Suppose that a tax of Tis placed on buyers, so the new demand equation is QD = 300 – (P + T). Solve for the new equilibrium. What happens to the price received by sellers, the price paid by buyers, and the quantity sold? c. Tax revenue is TxQ. Use your answer to part (b) to solve for tax revenue as a function of T.

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

Problem 10PA

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