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1. The market for educational courses is characterized by the demand equation: Qd=60-3p
And supply is characterized by:
Qs=P+20
a. Find the equilibrium in the market for courses. Show your work.
b. Compute the elasticity of demand and supply at the equilibrium. Show your work.
c. There is a policy proposal to impose a tax of $5 per course in this market. Draw the supply and demand in the market for educational courses, and draw the effect of tax in the market. Make sure to label all axes, lines, pre-tax equilibrium, post-tax consumer price, post-tax producer price.
d. Who bears the greater incidence of the tax? Briefly explain.
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