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Suppose that the demand equation: P = 12 - Q and supply equation: P =2 Q.
a. Calculate the equilibrium price and quantity.
b. Calculate the consumer surplus, producer surplus and total surplus at equilibrium.c. Suppose the government imposes a tax of $3 for each unit bought. Derive the new price that consumers pay, the price that firms receive, and quantity.
d. Calculate the deadweight loss of this tax.
e. In a diagram, show the equilibrium in part a and the equilibrium in part c; and the areas that you computed in part b and d.
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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