Step-by-step explanation:
Solve algebraically to find equilibrium P and Q
In equilibrium Qd = Qs
66-3P = -4+2P
-3P-2P = -4-66
-5P = -70
5P = 70
P = 14
Qd = Qs = 66-3P = 66-3(14) = 66-42 = 24 = Q
Sales tax reduces suppliers price by t (P-t)
Supply curve becomes: Qs = -4+2(P-t)
66-3P = -4+2(P-t)
66-3P = -4+2P-2t
-3P-2P = -4-2t-66
-5P = -70-2t
5P = 70+2t
P = 14+² /5t
Qd = Qs = 66-3P = 66-3(14+2 /5t) = 66-42-6 /5t = 24-⁶/5t
What is the equilibrium P and Q if the per unit tax is t=5
t = 5, Qs = -4+2(P-5) = -4+2P-10 = -14+2P
66-3P = -14+2P
-5P = -14-66
-5P = -80
5P = 80
P = 16 (i.e. 14+2 /5t)
Qd = Qs = 66-3P = 66-3(16) = 18 (i.e. 24-6 /5t)
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Answers & Comments
Step-by-step explanation:
Solve algebraically to find equilibrium P and Q
In equilibrium Qd = Qs
66-3P = -4+2P
-3P-2P = -4-66
-5P = -70
5P = 70
P = 14
Qd = Qs = 66-3P = 66-3(14) = 66-42 = 24 = Q
Sales tax reduces suppliers price by t (P-t)
Supply curve becomes: Qs = -4+2(P-t)
In equilibrium Qd = Qs
66-3P = -4+2(P-t)
66-3P = -4+2P-2t
-3P-2P = -4-2t-66
-5P = -70-2t
5P = 70+2t
P = 14+² /5t
Qd = Qs = 66-3P = 66-3(14+2 /5t) = 66-42-6 /5t = 24-⁶/5t
What is the equilibrium P and Q if the per unit tax is t=5
t = 5, Qs = -4+2(P-5) = -4+2P-10 = -14+2P
In equilibrium Qd = Qs
66-3P = -14+2P
-5P = -14-66
-5P = -80
5P = 80
P = 16 (i.e. 14+2 /5t)
Qd = Qs = 66-3P = 66-3(16) = 18 (i.e. 24-6 /5t)