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What is the before-tax equilibrium price and quantity

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Reference no: EM13888636

Suppose that the original before-tax demand curve is P = 98-2Qd and that supply is P = 2+2Qs. Now suppose a $3 unit tax is imposed on consumers.

a. Use supply and demand diagrams to show the effect of a $3-unit tax imposed on the demand side.

b. What is the before-tax equilibrium price and quantity?

c. What is the after-tax equilibrium quantity?

d. Calculate the economic incidence incurred by producers and the economic incidence incurred by consumers.

e. How much tax revenue is raised?

Reference no: EM13888636

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