Supply and Demand question with tax
I received a question which I couldn't understand. 'Consider the demand and supply curves D = 920 − 4P and S = 2P − 40.
(a) Find the equilibrium price P ∗ and corresponding quantity Q∗'
For this I got 160 for P and 280 for Q, which I think is right but the second part I am confused on: 'Now suppose that a tax of $4.50 per unit is imposed on the producer. How will this influence the equilibrium price? Compute the total revenue of the producer before the tax is imposed (R*) and after (^R).'
I'm guessing you do S = 2(P-4.5)-40 = 920 - 4P. I got 161.5 as the new P and 44,800 for revenue before tax. For after tax I got 45220 but i think it's wrong. Any help please?
(a) Find the equilibrium price P ∗ and corresponding quantity Q∗'
For this I got 160 for P and 280 for Q, which I think is right but the second part I am confused on: 'Now suppose that a tax of $4.50 per unit is imposed on the producer. How will this influence the equilibrium price? Compute the total revenue of the producer before the tax is imposed (R*) and after (^R).'
I'm guessing you do S = 2(P-4.5)-40 = 920 - 4P. I got 161.5 as the new P and 44,800 for revenue before tax. For after tax I got 45220 but i think it's wrong. Any help please?
Quick Reply
Related discussions
- Post Your Economics Question Here
- AQA A Level Economics Paper 2 (7136/2) -22th May 2023 [Exam Chat]
- A Level Edexcel Economics B Paper 1 (9EB0 01) 2023 [exam chat]
- Please can someone help with this A-Level Microeconomics question?
- Economics 2023 macro
- Edexcel A Level Economics A Paper 3 (9ECO 03) - 5th June 2023 [Exam Chat]
- microeconomics evaluation help
- A - level choice?
- Why are rents so high
- Eduqas A Level Economics Paper 1 [Exam Chat]
- Supply and Demand for Oil
- Edexcel A Level Economics A Paper 1 (9ECO 01) - 18 May 2023 [Exam Chat]
- Earning money in your own way is tough - advice?
- A level economics
- Please mark my econ 25 mark essay
- Teaching career
- MSc Logistics and Supply Chain Management in UK
- Which course to do at uni
- A-level Economics can someone help me answer this urgently
- logistics and supply chain management in Sussex university or Cranfield university!
