For the same economy as in Problem 3, suppose the government decides to levy an $8 per

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For the same economy as in Problem 3, suppose the government decides to levy an $8 per gallon tax on ice cream. Determine the partial equilibrium and general equilibrium effects of this tax on the prices and quantities of pie and ice cream.
In Problem 3
Using the same notation as in Worked-Out Problem 16.1, suppose the following formulas describe the weekly supply and demand for ice cream:
QdI = 300 -5PI - 4PI
QSI = 5PI 20
Also suppose the following formulas describe the supply and demand for pie:
QdP = 312 -8PP - 6PI
QSP = 4PP - 24
Solve for prices and quantities in a general equilibrium.
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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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