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Demand for coffee is P = 10 - 0.20Q and Supply of coffee is P = 0.05Q + 0.50
A) Calculate market equilibrium price and quantity
B) Calculate consumer and producer surplus if this market is in equilibrium.
C) Illustrate the coffee market with a graph. Be sure to label supply, demand, equilibrium price and quantity, consumer surplus, and producer surplus.
D) Briefly explain in what ways market equilibrium is considered efficient.
E) Calculate the effects a $2.00 per unit tax would have on price and quantity in the coffee market.
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