Demand for a product is described by the price-quantity curve p = 225 0.2g and supply is described by the by the price-quantity curve p = 45 +0.2q. How much should the government apply a tax per item to the supply so as to maximize tax revenue?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 4CQQ
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Demand for a product is described by the price-quantity curve p = 225 - 0.2q and supply is described
by the by the price-quantity curve p = 45 +0.2q. How much should the government apply a tax per
item to the supply so as to maximize tax revenue?
Transcribed Image Text:Demand for a product is described by the price-quantity curve p = 225 - 0.2q and supply is described by the by the price-quantity curve p = 45 +0.2q. How much should the government apply a tax per item to the supply so as to maximize tax revenue?
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