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Assume a firm produces subject to Q3 2 SP -20 and they face a market demand for their product of Qd = -5P + 600.
Assume a firm produces subject to Q3 2 SP -20 and they face a market demand for their product of Qd = -5P + 600. (7' points) a. If the government places a $3 per-unit production tax in this market, mathematically determine the market price and quantity after the tax, the amount of tax absorbed by the producer and paid by the consumer (per unit is fine), the amotmt of tax revenue generated, the dead weight loss to society. b. Assume a successful advertising campaign by this firm shifts the demand curve to a new function represented by Qd = -3P + 7'20. Assuming the firm still produces at the same rate and is still taxed $3 per-unit. Determine the effect on the ammutt of the tax that consumers and producers pay {per unit) and the amount of tax revenue and dead weight loss generated in the market. c. Critical thinking: Assume it cost the firm $10,000 to perform the advertising in \"b\". Was it worth it or not? Justify your answer. (Hint. . .think about line segment FIG)
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