Competitive equilibrium in the market

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Reference no: EM136584

Q. Consider a competitive market with 9 consumers, each of whom will buy at most one unit of the good and 8 vendors, each of whom will sell at most one unit of the good. Distribution of consumer values or consumer reservation prices is as follows:
Value of consumer and Number of consumer $2 4 $4 2 $6 3
The delivery of vendor costs (or vendor's reservation prices) is as follows:
Vendor Cost Number of Vendors $1 6 $3 2
1. A competitive equilibrium in this market, what price (P) arises as well as quantity (Q) would arise.
2. What is the equilibrium price (paid by buyers) and quantity if vendors are required to pay a tax of $4 for each unit of the good sold?
3. How much tax revenue is raised by this $4 per unit tax paid by vendors?
4. What is the deadweight loss of this $4 per unit tax paid by vendors?
5. What is the equilibrium price (paid by buyers) and quantity if buyers, instead of vendors, are required to pay the tax of $4 for each unit of the good sold?
6. What is the deadweight loss if buyers, instead of vendors, are required to pay the tax of $4 for each unit of the good sold?

Reference no: EM136584

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