Calculate the new quantity demanded

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Reference no: EM132503701

Demand: Pd = a - 18*Qd , Supply: Ps = b + 12*Qs where

  • a is the intercept of the demand curve (consumers reservation price).
  • b is the intercept of the supply curve (suppliers' reservation price)
  • Pd and Ps represent market prices
  • Qd and Qs represents the quantity demand and supplied respectively

Based on a willingness to pay survey (WIP) it was determined that the maximum amount the average consumer is willing to pay for a CORN BEEF is $400. On the supply side, it was determined that the minimum price at which a Grace Kennedy would be willing to sell the CORN BEEF for is $100.

1. Suppose that the government impose a tax of 10% on each tin of CORN BEEF sold calculate the new quantity demanded, quantity supplied and the shortage or surplus?

Reference no: EM132503701

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