Price and quantity sold in market after the tax is imposed

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The equilibrium price and quantity of gasoline is $2.50 per gallon and equilibrium quantity is 15 million gallons. The price elasticity of demand is -0.5 and the price elasticity of supply is 1.

The state legislates that a sales tax of $0.10 per gallon should be imposed on oil companies as a measure to collect revenue and cut oil consumption.

a) Find the price and quantity sold in the market after the tax is imposed.

Reference no: EM131006002

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