1. The demand curve for product X is given by
a. Find the inverse demand curve.
b. How much consumer surplus do consumers receive when Px = $45?
c. How much consumer surplus do consumers receive when Px = $30?
d. In general, what happens to the level of consumer surplus as the price of a good falls?
2. Suppose demand and supply are given by
Determine the equilibrium price and quantity. Show the equilibrium graphically.
Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity.
How much tax revenue does the government earn with the $12 tax?