Question
Problem 3. In a competitive market, the industry demand and supply curves are P=200-0.2Qd and P=100+0.3Qs, respectively. a) Find the market's equilibrium price and output.
Problem 3. In a competitive market, the industry demand and supply curves are P=200-0.2Qd and P=100+0.3Qs, respectively. a) Find the market's equilibrium price and output. b) Suppose the government imposes a tax of $20 per unit of output on all firms in the industry. What effect does this have on the industry supply curve? Find the new competitive price and output. What portion of the tax has been passed on to consumers via a higher price? c) Suppose a $20 per unit sales tax is imposed on consumers. What effect does this have on the industry demand curve? Find the new competitive price and output. Compare this answer to your findings in part b.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started