QD=50 – 2 P + 0.5 PR and Qs = -4 + P. Here PR if the price of a related good. What is the equilibrium price and quantity if PR =Rs. 10? Plot the demand and supply curve and show the equilibrium in the same plot. If govt. imposes tax on the related good by Rs.2 per unit, then how the equilibrium will change?

Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
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  1. QD=50 – 2 P + 0.5 PR and Qs = -4 + P. Here PR if the price of a related good.
    1. What is the equilibrium price and quantity if PR =Rs. 10?
    2. Plot the demand and supply curve and show the equilibrium in the same plot.
    3. If govt. imposes tax on the related good by Rs.2 per unit, then how the equilibrium will change?
    4. Do buyers of the commodity bear the whole burden of the excise duty?
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