The short-run market demand and supply curves for good X are as follows:QD = 20 - 4PQS = 7 + 2.5PFind the equilibrium price and quantity before the imposition of the tax.What is the price actually paid by the demanders (Pd) due to a quantity or specific tax of $1 per unit collected from the buyers?What is the price actually received by the suppliers (Ps) due to a quantity or specific tax of $1 per unit collected from the buyers?What is the after- or post-tax quantity? What is the total revenue after the imposition of the quantity or specific tax?How much of the tax do consumers pay (in percent)?How much of the tax do producers pay (in percent)?

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Answered: The short-run market demand and supply…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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The short-run market demand and supply curves for good X are as follows:

Q_D = 20 - 4P

Q_S = 7 + 2.5P

1. Find the equilibrium price and quantity before the imposition of the tax.
2. What is the price actually paid by the demanders (Pd) due to a quantity or specific tax of $1 per unit collected from the buyers?
3. What is the price actually received by the suppliers (Ps) due to a quantity or specific tax of $1 per unit collected from the buyers?
4. What is the after- or post-tax quantity?
5. What is the total revenue after the imposition of the quantity or specific tax?
6. How much of the tax do consumers pay (in percent)?
7. How much of the tax do producers pay (in percent)?

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