The long-run supply curve for a particular type of kitchen knife is a hori- zontal line at a price of $3 per knife. The demand curve for such a kitchen knife is Q, = 50 – 2P where Q, is the quantity of knives demanded (in millions per year) and P is the price per knife (in dollars). 253 CHAPTER 7: PERFECT COMPETITION a. What is the equilibrium output of such knives? b. If a tax of $1 is imposed on each knife, what is the equilibrium output of such knives? (Assume the tax is collected by the government from the suppliers of knives.)

The long-run supply curve for a particular type of kitchen knife is a hori- zontal line at a price of $3 per knife. The demand curve for such a kitchen knife is Q, = 50 – 2P where Q, is the quantity of knives demanded (in millions per year) and P is the price per knife (in dollars). 253 CHAPTER 7: PERFECT COMPETITION a. What is the equilibrium output of such knives? b. If a tax of $1 is imposed on each knife, what is the equilibrium output of such knives? (Assume the tax is collected by the government from the suppliers of knives.)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 8PA

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