The supply function is given by: P = Q + 10.
The demand function is given by: P = 50 - 3Q.
a) Sketch these two functions on a single diagram.
b) Find the equilibrium price and quantity algebraically and check that your solution is consistent with your sketch.
c) If the government imposes a fixed tax of £8 on each unit of a good, show how the supply curve is affected both algebraically and on your sketch.
d) Find the equilibrium price and quantity following the imposition of the tax. Again, check that your algebraic solution is consistent with your sketch.
e) Find the government tax revenue.
f) Finally, by comparing prices paid by the consumer before and after the imposition of the tax, determine the proportion of the £8 per unit tax that is paid by the consumers.