Suppose QD=100-2P, and QS=-50+3P. (a)What is the original market equilibrium price and quantity? (b)The government imposes a tax

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问题  Suppose QD=100-2P, and QS=-50+3P.
(a)What is the original market equilibrium price and quantity?
(b)The government imposes a tax of $1 per unit. Compute the after-tax equilibrium. What are the new equilibrium price and quantity? How much revenue does the government collect?

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答案(a)Setting QD=QS, the original equilibrium is the solution to 100-2P=-50+3P or P* =$30 and Q*=40. (b)After a $1 tax is imposed, we can solve for the price received by sellers: 100-2(PS+1)= -50+ 3PSor PS* = 148/5 =$29.60. The new quantity is Q*=38.8. The government collects $×38.8=$38.80.

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