Question
Demand as a function of price is D(p) = 100 - p. Supply as a function of price is S(p) = p. The government
Demand as a function of price is D(p) = 100 - p. Supply as a function of price is S(p) = p. The government puts a tax of 8 on this item. What is the total deadweight loss from this tax? Use two decimals in your answer. (Hint: let the selling price be p. Then the consumer will pay p plus the tax. Equilibrium in the market means quantity demanded is equal to quantity supplied. Then think about how much the equilibrium quantity will decrease.)
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
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