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Consider A Perfectly Competitive Market With Market Supply Qs = 2 + P And Market Demand Qd = 40 P/2

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85 = – 2 + P
Q = 40 – 1/2
Tax = $ 6 per wid
Let’s assume the tax is on the sellers.
This would shift the supply cwere up
by the amount of the tax.
Q5 = – 2 + P
P = Qs+ 2
7 P’ = Q5 + ( 2 + 6 ) : New is Curve.
* P’ = Q5+8.
Of = P’- 8
P
32
DWL = area
AE’EL
28 10
26
26 .
At new equilibrium :
Q5quot; = QD + P – 8 = 40- 1/2
3 P / 2 = 48 = P = 32
8 = P- 8 = 24.
8′ = 24, Pb = 32 , Pg = Pp – t =
quot; is = 32 – 6 = 26.
At original equilibrium :
amp; = QD 3 – 2 + P= 40- P/2
42 = 3P/2 2 P= 28
9 = – 2 + P 2 6 = 26
DWL = 1 * (32- 26) ( 26- 24) 2 1X6*2
DWL = $ 6Microeconomics