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Strategy of providing consumers income tax credits

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1. Assume the government has set a goal in 2016 to be more environmentally friendly; to meet this goal the government has come up with a strategy of providing consumers income tax credits for installing an energy efficient heating source:

a. Now assume that the market can be explained initially by the supply and demand curves Qd = -2p + 100 and Qs = 4p. After the plan, the functions are Qd = -3p + 150 and Qs = 4p. Mathematically determine the amount of new total surplus generated.

b. Generate a graph to show this total surplus change, including the intercepts of all functions.

Reference no: EM131211760

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