Compute the new equilibrium

Reference no: EM131072981

The demand for bags of candy is given by P = 48-0.2Q, and the supply by P = Q.

(a) Illustrate the resulting market equilibrium in a diagram.

(b) If the government now puts a $12 tax on all such candy bags, illustrate on a diagram how the supply curve will change.

(d) Instead of the specific tax imposed in part (b), a percentage tax (ad valorem) equal to 30 percent is imposed. Illustrate how the supply curve would change.

(e) Compute the new equilibrium.

Reference no: EM131072981

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