B The demand and supply functions for a product are: Q=50-3P and Q, =-6+4P, respectively (1) Graph each function on the same diagram. From the graph determine the equilibrium price and quantity. Confirm your answer algebraically. If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation of the supply function to include tax. Graph the supply function and hence determine the equilibrium point when tax is included. What percentage of the () tax is paid by the consumer? Give an interpretation for your results.

B The demand and supply functions for a product are: Q=50-3P and Q, =-6+4P, respectively (1) Graph each function on the same diagram. From the graph determine the equilibrium price and quantity. Confirm your answer algebraically. If the producer must pay a fixed tax of £3.5 per unit, rewrite the equation of the supply function to include tax. Graph the supply function and hence determine the equilibrium point when tax is included. What percentage of the () tax is paid by the consumer? Give an interpretation for your results.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 10PA

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