Suppose the supply of a good is given by the equation

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Suppose the supply of a good is given by the equation Q^s=240P-240, and the demand for the good is given by the equation Q^D=560-80P, where quantity (Q) is measured in million of units and price (P) is measured in dollars per unit.

The government decides to levy an excise tax of $2.00 per unit on the good, to be paid by the seller.

Calculate the value of each of the following, before the tax and after the tax, to complete the table that follows:

1. The Equilibrium quantity produced Equilibrium Quantity (Millions of units) Before tax? After tax?
2. The equilibrium price consumers pay for the good Equilibrium Price per unit Paid by Consumers Before tax? After tax?

3. The price received by sellers rice per unit Received by Sellers Before tax? After tax?

Reference no: EM13379187

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