1. You are given the following information about the market for motorcycles.
Market Demand: P = 400 - 4Q
Market Supply: P = 4Q
a. Find the equilibrium price and quantity in this market.
b. What is the value of consumer surplus in this market?
d. Suppose that the government decides to impose an excise tax of $80 per motorcycle on producers in this market. What will be the number of motorcycles sold in this market once this tax is imposed?
e. Given the tax described in part (d), what will be the tax incidence on consumers?
f. Given the tax described in part (d), what is the value of the deadweight loss from the tax?
g. What is the loss in producer surplus from the imposition of the excise tax described in part (d)?
h. points) Suppose the government would like motorcycle consumption to fall to 20 units. Relative to the initial situation before there was any excise tax, how big an excise tax would the government need to place on motorcycles in order for consumption to fall to 20 units?