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Compute the new equilibrium price and quantity after 6% service and sales tax imposed on buyer/consumer. QD = 900 2P + 3PA + 0.4M

Compute the new equilibrium price and quantity after 6% service and sales tax imposed on buyer/consumer.

QD = 900 – 2P + 3PA + 0.4M + 1.5A

QS = 45,500 + 0.5P

where

QD = quantity demanded

P = price of Myvi

PA = price of Axia

M = average consumer’s income

A = promotional expenses

QS = quantity supplied

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