Question - Suppose the demand and supply of a good are given below:
Qd = 100/3 - P/3
Qs = -5 + P/2
1. Plot the demand and supply curve on the P (vertical)-Q (horizontal)space
2. Calculate the CS, PS and TS.
3. Now suppose a tax of $10/unit is imposed on buyers.
4. Plot the new equilibrium with tax
5. Find the new equilibrium prices and quantity
6. Calculate the CS, PS, TS, gov's tax, and DWL.
7. Calculate the incidence of the tax.
8. Calculate the elasticity of demand and supply to price changes (from before to after the tax is imposed)