Determine the equilibrium price and quantity

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Reference no: EM131423823

The following data are the market supply and demand schedules for Economics Study Guides, which are products in a competitive market.

Price ($)

Quantity Demanded (Qd)

Quantity Supplied (QS)

10

1000

200

20

800

400

30

600

600

40

400

800

50

200

1000

a) Graphically construct the supply and demand schedules and determine the equilibrium price and quantity.

b) Suppose a tax of $ 10 per textbook (guide) is imposed on the producers.  What will be the new equilibrium price paid by the consumers and the quantity of textbook demanded after the tax has been imposed?  What will be the price the producers receive after the tax has been imposed? Would your answer change if the tax were imposed on the consumer instead of the producers?  Explain.  (This answer can be determined using a graph or mathematically)

c) Calculate the amount of tax collected and the negative impact of tax on economic surplue (dead weight loss). 

Reference no: EM131423823

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