What can you say about the change in equilibrium

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Reference no: EM133390575

Question: The market for a good is defined by the supply and demand equations as given below:

Qd = 300 - P

Qs = 2P

After a tax, T is levied, the new demand equation becomes:

Qd = 300 - (P+T)

Qs = 2P

(a) What is the equilibrium price and quantity if tax T = 0, i.e. there is no tax?

(b) Suppose T = $30, what can you say about the change in equilibrium (price and quantity) after a tax T is levied compared to the situation before tax? Calculate the tax revenue. Show your work

Reference no: EM133390575

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