Beer in Huntington sells for $2 a bottle, or in other words, supply is perfectly elastic. The demand for beer (in millions of bottles) is given by: Qd =10 2 p a.

Find the equilibrium price and quantity.

b. Last weekend, the city of Huntington enacted a beer tax of $1 per bottle (paid by retailers) to attempt to get people to drink less.

Find the new equilibrium price and quantity and graph demand as well as both supply curves.

c. The beer tax expires before Valentine's Day, and on the Eve of Valentine's Day, Huntington has as much beer in town as is usually consumed. Unfortunately, more consumers get into beer consumption and consume 2 million bottles, and sellers respond by getting as much per bottle as they can. Find the new equilibrium price and quantity.