Suppose the following demand and supply function of a commodity.                                       Qd = 55 - 5P   Qs = -50 + 10P   After imposing tax, the new supply function is   Qs = -60 + 10P   Find out the equilibrium price and quantity before tax. Find consumer and producer surplus before tax. Determine government revenue and dead weight loss after tax.

Managerial Economics: A Problem Solving Approach
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Suppose the following demand and supply function of a commodity.                                      

Qd = 55 - 5P

 

Qs = -50 + 10P

 

After imposing tax, the new supply function is

 

Qs = -60 + 10P

 

  1. Find out the equilibrium price and quantity before tax.
  2. Find consumer and producer surplus before tax.
  • Determine government revenue and dead weight loss after tax.
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