Please remember to: Label all axes (P, Q) Label all lines/curves (Demand, Supply) Label all relevant equilibrium points Label intercepts for your linear demand and supply. (Intercepts are the points where the lines intersect the axes. For example, if a demand curve intersects the price axis at P=100, indicating that at P=100, 0 units are demanded, you should label that point on the axis with the price of 100). Please limit your depictions of supply and demand only to the non-negative values of P and Q (e.g., utilize only Quadrant 1 of the coordinate plane). This means that your supply curve will have one applicable intercept on the P-axis, while the demand curve will have two applicable intercepts on the P- and Q-axes.

Continue your analysis of the video poker market in Chambana: demand by patrons for the games (in thousands per week) is Qd = 120 - 3P and the supply is Qs = 2P - 30 where P is the price in cents charged to play a game. Now suppose that the city of Chambana passes a new law which requires that all video poker arcades contribute m cents to a city charitable fund for each game played on their machines. This is, essentially, an excise tax. In a new diagram, show the effect of the new law on the market and explain this effect. (Do not try to give an algebraic solution; just show what happens graphically and provide a description. Please be sure to illustrate how the tax of m cents shifts a specific curve, consistent with the approach we've taken in this course in modeling taxes and subsidies. Clearly indicate the distance by which the curve has shifted. Recall that the direction of the shift carries a specific meaning in economics.) Graphically indicate the incidence of taxation on consumers as well as arcade owners (producers). Do not attempt to quantify the incidence of taxation. Explain what incidence of taxation is and what your graph tells you about the incidence of taxation in this case. (Suggested response volume: 1 to 2 paragraphs).