Description of this paper

The demand function

Description

solution


Question

The demand function is given by Qd=970-2Pd, and the supply function is given by Qs=-330+3Ps. answer following;a) find equilibrium;b) find social total surplus;c) Suppose the sales tax is imposed by 10% of the price. Draw the new demand curve and find the new equilibrium. Compare social total surplus with the one in b). (hint: the after-tax consumer price is Pd=1.1P where P denotes the market price. Think why.)

 

Paper#25691 | Written in 18-Jul-2015

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