1. Assume S(P-)=50+P- D(P+)=370-3P+
Sales tax of 20%
Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.
2. Assume S(P-)=50+3P- D(P+)=370-P+
Sales tax of 20%
Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.
3. Explain how you answer for question 1 and 2 illustrate the principle that the less responsive side of the market (with a smaller price coefficient) will pay more than half the total cost of a sales tax.
4. Draw diagrams of question 1 and 2 and explain how they illustrate your answer to question 3.
[Hint: Be careful about drawing the relative slopes of the supply and demand functions.]
5. Suppose the government sets a controlled price below the market clearing price for a commodity. Draw a diagram and use the idea of a maximum buying price to explain whether the total price paid by the buyers will end up lower or higher than before.
Could someone help me with number 3,4, and 5? Please and thank you!!
1. Assume S(P-)=50+P- D(P+)=370-3P+
Sales tax of 20%
Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.
2. Assume S(P-)=50+3P- D(P+)=370-P+
Sales tax of 20%
Calculate the equilibrium buyers' and sellers' price with no sale tax, and then with the 20% tax assumed above.
3. Explain how you answer for question 1 and 2 illustrate the principle that the less responsive side of the market (with a smaller price coefficient) will pay more than half the total cost of a sales tax.
4. Draw diagrams of question 1 and 2 and explain how they illustrate your answer to question 3.
[Hint: Be careful about drawing the relative slopes of the supply and demand functions.]
5. Suppose the government sets a controlled price below the market clearing price for a commodity. Draw a diagram and use the idea of a maximum buying price to explain whether the total price paid by the buyers will end up lower or higher than before.
Could someone help me with number 3,4, and 5? Please and thank you!!
