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In a market, the demand is given by P = 200-2Q and the supply by P = 3Q. Calculate equilibrium price and equilibrium quantity and
In a market, the demand is given by P = 200-2Q and the supply by P = 3Q.
Calculate equilibrium price and equilibrium quantity and illustrate in a diagram. Suppose now that the state introduces a unit tax on the product of SEK 50 per unit sold that is charged to the sellers.
How will the state's tax revenue be?
How will the tax burden be distributed and what will be the welfare loss? Explain.
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