' Quantity supplied 05 alter ta: Ostl) (0003) 1 (005) 8 50 24 40 B 00 2B 36 7 50 32 32 7 00 36 26 i3 50 40 24 6 00 44 20 i, What is the equilibrium price and quantity? 2, Suppose the government imposes a tax of 5100 on each water bottles Complete the column showing quantity supplied after the tax. (Hint: at a price of $800 the quantity supplied was 36000. With the tax. this quantity supplied will be supplied only at a price oi $900. so the Quantity supplied with a tax at 9.00 IS 36000) You continue. so at 88:50. the producer only gets 7.50. so is only willing to otter 32000 units Quantity supplied Qd Os alter tax Gsit) Price 0005) (0005) (000:) S9 00 20 44 36 8.50 2'! 40 32 B 00 28 36 28 7 50 3? 32 2-1 7 00 :36 28 6 50 40 24 6 00 44 20 3, On your graph. plot the new supply curve after the imposition of the tax (in a different colour, to differentiate the supply curve). 4. What will be the new equilibrium price and quantity? 5. How much of the tax is passed onto the consumers in the lorm of price increase. and how much is paid by the producers? Indicate the producer and consumer burden on your graph Fleier to this example to help you, I I'D-II 01 Q Qua-my by Economics Chime You will note that the supply curve shifts left. Find the new equilibrium price (P1)r Draw a straight line down to the x-axis. Where the line meets the original supply curve. draw a line to the y axis. The area beneath the original price line is the burden on the producer and the area above is the burden on the consumer burden. The level 01 burden of a tax on the producer or consumer depends on elasticity oi demand