Suppose linear supply and demand prices (in e ) are given repectively by
Ps = 4 Q + 100,
Pd = 400 − 2 Q .
(a) Find the equilibrium quantity and the equilibrium price.
(b) Suppose a tax of e 12 per unit is introduced. Determine the new equilibria.
(c) How is the tax shared between producer and consumer
+129839 Here's (a)
Setting
Ps = 4 Q + 100,
Pd = 400 − 2 Q equal, we have
4Q + 100 = 400 - 2Q add 2Q to both sides, subtract 100 from both sides
6Q = 300 divide by 6 on both sides
Q = 50 this is the equilibrium quantity
And using either equation, the equilibrium price = 4(50) + 100 = 200 + 100 = 300 [euros]
