A hometown marker for gummy bears is as follows:
Qd = 600 - 15p and Qs = -100 + 5p
A) Find the equilibrium price and quantity and graph the demand and supply curves.
B) Measure the consumer, producer and total surplus for the economy. Explain the concept of welfare economics in general and in particular discuss the efficiency of the markets within the context of producer and consumer surplus.
C) The city council decided to build a new baseball stadium with public funds. So they decided to tax all food items (including gummy bears) by 5 dollars at the register. What's the new equation with the tax? What's the new quantity demanded? What're the prices the consumer pays and producers received?
D) Calculate the point price elasticity of demand and supply and predict who will have the biggest tax burden, the consumer or the producer. Then prove the statement by finding the consumer's and producer's tax burdens