Suppose a tax of 2 per unit is imposed on the producer how

Question

Question: (a) Consider the demand and supply curves

D = 150 - (½)P,        S = 20 + 2P

Find the equilibrium price P∗, and the corresponding quantity Q∗.

(b) Suppose a tax of $2 per unit is imposed on the producer. How will this influence the equilibrium price?

(c) Compute the total revenue obtained by the producer before the tax is imposed (R∗) and after (R^).