Question: 1. Given the demand schedule p = 180 - 8q and the supply schedule p = 25 + 2q, what level of per-unit tax would maximize the government's tax yield?
2. Change one of the parameters in Question 1 above and work out the new answer.
3. Assume a market has the demand function q = 40-0.5p and the supply function q = 2p - 4. The government currently imposes a per-unit tax of £3. If this tax is slightly increased will the tax yield rise or fall?