Suppose that a market is described by the following supply and demand equations: *QS = 2P* *QD = 300 – P* *b.* Suppose that a tax of T is placed on buyers, so the new demand equation is *QD = 300 – (P + T).* Solve for the new equilibrium. *c.* Tax revenue is T × Q. Use your answer to part *(b)* to solve for tax revenue as a function of T. Graph this relationship for T between 0 and 300.

Suppose that a market is described by the following supply and demand equations: QS = 2P QD = 300 – P b. Suppose that a tax of T is placed on buyers, so the new demand equation is QD = 300 – (P + T). Solve for the new equilibrium. c. Tax revenue is T × Q. Use your answer to part (b) to solve for tax revenue as a function of T. Graph this relationship for T between 0 and 300.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 17SQ

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