Solve equilibrium price and the equilibrium quantity, Macroeconomics

Suppose that a widget market is described by the following supply and demand equations.

Supply: Q = 3P

Demand: Q=400 - P

a. Solve for the equilibrium price and the equilibrium quantity.

b. Assume that a tax of t is placed on consumers, so the new demand equation is

Demand: Q=400 - (P + t)

Solve for the new equilibrium. What happens to the price received by suppliers, the price paid by consumers, and the quantity sold?

c. The local government's tax revenue is t x Q. Use your answer to the part (b) to solve for tax revenue as a function of t. Government's tax revenue is t x Q. Use your answer to the part (b) to solve for tax revenue as a function of t. Graph this relationship for t between 0 and 400.

d. The local government now imposes a tax on this good of $300 per

 

Posted Date: 3/13/2013 2:29:41 AM | Location : United States







Related Discussions:- Solve equilibrium price and the equilibrium quantity, Assignment Help, Ask Question on Solve equilibrium price and the equilibrium quantity, Get Answer, Expert's Help, Solve equilibrium price and the equilibrium quantity Discussions

Write discussion on Solve equilibrium price and the equilibrium quantity
Your posts are moderated
Related Questions
The hypotheses are: The null hypothesis,  infers that a unit root exists, whereas the alternative hypothesis,  concludes that there is no root. Decision rule:

Kermit is considering purchasing a new computer system. The purchase price is $106,430. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compo

What is gross domestic product Economic growth is most commonly calculated in terms of the annual percentage rate of change in real gross domestic product (GDP).

Q. Consumption function in the IS-LM model? The consumption function will be the same as in cross model, consumption will depend positively on Y. In the classical model, consum


Explain whether the following statements are true or false: a) The long run aggregate supply curve is vertical because economic forces do not affect long run aggregate supply.

A few years ago, the Federal Communications Commission (FCC) eliminated a rule that required Baby Bells to provide rivals access and discounted rates to current broadband facilitie

An owner can lease her building for $100,000 per year for the next three years. The explicit cost of maintaining the building is $35,000, and the implicit cost is $50,000. All reve

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre

In order to observe the correlations between each variable, the most effective method to use is Vector Autoregression (VAR). VAR estimation uses a system of simultaneous equations