Suppose the demand and supply of a good
Question # 00619735
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Updated on: 11/17/2017 01:34 PM Due on: 11/17/2017
Suppose the demand and supply of a good are given below:
Qd = 100/3  P/3
Qs = 5 + P/2
1 Plot the demand and supply curve on the P (vertical)Q (horizontal)space
2 Calculate the CS, PS and TS.
3 Now suppose a tax of $10/unit is imposed on buyers.
4 Plot the new equilibrium with tax
5 Find the new equilibrium prices and quantity
6 Calculate the CS, PS, TS, gov's tax, and DWL.
7 Calculate the incidence of the tax.
8 Calculate the elasticity of demand and supply to price changes (from before to after the tax is imposed)

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Solution: Suppose the demand and supply of a good