Calculate the per-unit tax

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Reference no: EM131095539

It's a specialized market, so we'll just have to assume we have enough buyers and sellers to have our demand and supply curves be straight, smooth lines. The following information applies to the market before any tax is applied:

Vertical intercept, demand curve: 1120

Vertical intercept, supply curve: -80 (NEGATIVE 80)

P* = $160

Q* = 80

Later, a tax is put on the market. You'll have to calculate the per-unit tax. But you do know that it makes the price paid by buyers rise to $640 and the price received by sellers to fall to $40. With the tax, only 40 units are sold.

Calculate the per-unit tax.

Reference no: EM131095539

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