How much tax revenue will this excise tax yield government

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Reference no: EM13838046

Suppose the equation for the demand curve for some product (X) is P = 8 - .6Q and the supply curve is P = 2 + .4Q.

What is the equilibrium price and quantity?

Now, suppose an excise tax is imposed on good X such that the new supply equation is P = 4 + .4Q. How much tax revenue will this excise tax yield the government?

Graph the curves and label the area of the graph which represents the tax collection as TC and the area representing the deadweight loss as DWL.

Reference no: EM13838046

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