Question
Please don't copy existing solutions, these are wrong. The elasticity of demand for home computers is -2.5, the elasticity of demand for business computers is
Please don't copy existing solutions, these are wrong.
The elasticity of demand for home computers is -2.5, the elasticity of demand for business computers is -.90, and the elasticity of supply for computers for both purposes is
1. a.A per-unit tax of $200 is imposed on the suppliers of computers. How much does the gross price increase in each market? [Hint: first find the tax incidence/shares.]
b.Suppose the untaxed market equilibrium price and quantity in the home computer market are $850 and 10 million, respectively. In the business market, the untaxed market equilibrium price and quantity are $1200 and 15 million, respectively. What is the deadweight loss of the $200 tax?
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