QUESTION 2

Suppose that the government imposes a per-unit tax on cell phones. The tax is imposed on producers of cell phones and the amount of the tax is $50 per cell phone. The following graph shows the effect of the tax. Use the graph to answer the following questions.

1. What is the equilibrium P* and Q* before the imposition of the tax?
2. How many cell phones per year are sold after the tax has been imposed?
3. What price per cell phone do consumers pay after the tax has been imposed?
4. What price do producers receive per cell phone after the tax is paid?
5. How much of the tax per cell phone is paid by producers?
6. How much of the tax per cell phone is paid by consumers?