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Explain what would happen to equilibrium price and quantity

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Reference no: EM13243760

Explain what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well)

  • a. The price of Coke decreases.
  • b. Average household income falls from $50,000 to $43,000
  • c. There are improvements in soft-drink bottling technology.
  • d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign.

 Use the following equations for demand and supply to solve for market equilibrium price and quantity:

  • Demand: Qd = 100 - 4P
  • Supply: Qs = 10 + 6P

. Using the diagram below, answer the following questions:

  • a. How much is the per-unit tax on cigarettes?
  • b. What price do consumers pay after the tax?
  • c. How much tax revenue is collected?
  • d. What is the amount of deadweight loss?

Reference no: EM13243760

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