QD=50 – 2 P + 0.5 PR and Qs = -4 + P. Here PR if the price of a related good. What is the equilibrium price and quantity if PR =Rs. 10? Plot the demand and supply curve and show the equilibrium in the same plot. If govt. imposes tax on the related good by Rs.2 per unit, then how the equilibrium will change?

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter6: Demand And Elasticity
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  1. QD=50 – 2 P + 0.5 PR and Qs = -4 + P. Here PR if the price of a related good.
    1. What is the equilibrium price and quantity if PR =Rs. 10?
    2. Plot the demand and supply curve and show the equilibrium in the same plot.
    3. If govt. imposes tax on the related good by Rs.2 per unit, then how the equilibrium will change?
    4. Do buyers of the commodity bear the whole burden of the excise duty?
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