Described by the supply and demand functions

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Reference no: EM131097177

The market for a pack of 12 golf balls has been described by the following supply and demand functions:

Supply: P = 10 + 4Q

Demand: P = 100 – 5Q

h) Now assume that instead of imposing a per-unit tax of $9.00 per pack on the suppliers of golf balls the government decides to apply the same per-unit tax of $9.00 on consumers. Depict this on your demand and supply diagram. (Hint: the new tax inclusive demand function will be: P = 91 – 5Q) What is the new market equilibrium quantity? What price will consumers now pay and what price will suppliers now receive?

i) How much is the government revenue from the tax on consumers?

j) Who bears the greatest burden of the tax in each case, producers or consumers? Does your answer depend on whether the tax is levied on producers or consumers?

Reference no: EM131097177

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