Use the graph and the inverse demand equation (P=50 - .5Q), inverse supply equation (P=0.333Q) and the inverse supply equation with tax (P=0.333Q + t). a. Solve for the DWL and tax revenue when the tax is increased to t=30 b. Solve for the DWL and tax revenue when the tax is increased to t=40 c. Explain what happens to DWL and tax revenue as tax size increases from 10, to 30 to 40. 3. Note: Show solutions and round off answers to whole numbers.
Use the graph and the inverse demand equation (P=50 - .5Q), inverse supply equation (P=0.333Q) and the inverse supply equation with tax (P=0.333Q + t). a. Solve for the DWL and tax revenue when the tax is increased to t=30 b. Solve for the DWL and tax revenue when the tax is increased to t=40 c. Explain what happens to DWL and tax revenue as tax size increases from 10, to 30 to 40. 3. Note: Show solutions and round off answers to whole numbers.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 4CQQ
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2. Use the graph and the inverse
a. Solve for the DWL and tax revenue when the tax is increased to t=30
b. Solve for the DWL and tax revenue when the tax is increased to t=40
c. Explain what happens to DWL and tax revenue as tax size increases from 10, to 30 to 40. 3.
Note: Show solutions and round off answers to whole numbers.
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