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Suppose demand and supply are given by Q^d=14-0.5P and Q^s=0.25P-1.

a)Determine the equilibrium quantity and price in this market. Show the equilibrium graphically.

b)Suppose a $12 excise tax is imposed on the good. Determine new supply and the new equilibrium quantity and price.

c)How much does producers' revenue change?

d)How much tax revenue does the government earn?

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The demand and supply functions for a good are given by the equation P=80-2Q and P=20+4Q respectively. A) Calculate the equilibrium price and quantity B) Calculate the consumer and producer surplus at Equilibrium.

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Suppose the market for widgets can be described by the following equations

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Supply: Ā  P = Q ā€“ 4

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a. What are the equilibrium price and quantity?

b. Suppose the government imposes a tax of $1 per unit to reduce widget consumption and raise government revenues. What will the new equilibrium quantity be? What price will the buyer pay? What amount per unit will the seller receive? What will be the total government revenue?

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Suppose you are hired by the Martin guitar company as an economic consultant. You estimate the demand for Martin guitars to be Q = 8000 - 2P. Suppose the supply of Martin Guitars is given by Q = -2000 +3P. What is the equilibrium price of Martin guitars?

  1. What is the equilibrium quantity of Martin guitars?
  2. What is the price elasticity of demand at the equilibrium price and quantity?
  3. What is the price elasticity of supply at the equilibrium price and quantity?
  4. For the next seven questions, suppose a per-unit excise tax of $40 per guitar is levied on the consumers.
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  • What percent of the tax will be paid by the suppliers of Martin guitars? (give an answer between 0 and 100)
  • How many guitars will be sold after the tax is imposed?
  • How much consumer surplus do consumers get after the tax?
  • What is the deadweight loss created by this tax?

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