Consider the market for volleyballs. Assume that supply and demand for volleyballs are given by the equations below: QD = 100 2PD, QS = PS 20 (a) What is the market equilibrium in the market for volleyballs?

(b) At the market equilibrium, what are the price elasticities of demand and supply?

Now, imagine that the government imposes a $3 excise tax on volleyball sellers.

(c) Without computing the market equilibrium, we can correctly figure out how much of the tax for each volleyball sold will be borne by consumers, and how much will be borne by producers. How can we do this, and how much of the tax will each side bear?

(d) What is the new market equilibrium, after the tax?

(e) What is the dead weight loss due to the tax?