Suppose the market demand function is given by D P D P D and S P S P S a Find the

Suppose the market demand function is given by D P D P D and S P

is given by D P D P D and S P S P S a Find the market equilibrium without taxes that is

Suppose the market demand function is given by D P D P D and

S P S P S a Find the market equilibrium without taxes that is

Suppose the market demand function is given by D P D

Suppose the market demand function

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Paper instructions

Suppose the market demand function is given by D(PD) = 60 ? PD and S(PS) = 2PS.
(a) (Find the market equilibrium without taxes (that is, when PD = PS).
(b) Suppose now the supplier is required to play a per unit tax of t = 3. Draw a graph to show the change in the supply curve. Find the equilibrium quantity and prices, q?, PS?, and PD?. How much of the per unit tax is passed on to the consumer? (Hint: in this case, the vertical axis is the demand price.)
(c) Suppose now the demander is required to play a per unit tax of t = 3. Draw a graph to show the change in the demand curve. Find the equilibrium quantity and prices, q?, PS?, and PD?. (Hint: in this case, the vertical axis is the supply price.) Compare your answers in parts b and c.
(d) Calculate the change in consumer's surplus, change in producer's surplus, tax revenue, and dead weight loss as a result of the policy change. Illustrate them on a graph.

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Suppose the market demand function is given by D ( P D ) = 60 P D and S ( P S ) = 2 P S . (a) (Find the market equilibrium without taxes (that is,...