Suppose demand for good X is given by QD = 900- 1/2P where p is the price and QD the quantity demanded. Supply is given by QS = 1/4P. a) Suppose  60 TL tax is imposed on each unit of X that is purchased. What are the equilibrium price and quantity of X after the tax is imposed?   b)  What is the burden of the tax? Explain the key factors that determine the incidence of the tax

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 25SQ
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  1. Suppose demand for good X is given by QD = 900- 1/2P where p is the price and QD the quantity demanded. Supply is given by QS = 1/4P.

a) Suppose  60 TL tax is imposed on each unit of X that is purchased. What are the equilibrium price and quantity of X after the tax is imposed?

 

b)  What is the burden of the tax? Explain the key factors that determine the incidence of the tax

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