Illustrate what is the after-tax market equilibrium price

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Reference no: EM1354334

Suppose the market for Gadgets is described by the following demand and supply functions:

Qd = 50 - 2P
Qs = 3P

(a) What is the competitive market equilibrium price and quantity?

(b) Assume a per-unit tax of $2.00 is levied on the producers of Gadgets. Illustrate what is the after-tax market equilibrium price and quantity?

(d) What is the tax incidence, i.e., how much of the tax do consumer's pay, producer's pay?

Reference no: EM1354334

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