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Solve clearly In a given country up to 2011 the inverse demand function for books was given by the formula P(Q)= 226 - Q, while

Solve clearly

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In a given country up to 2011 the inverse demand function for books was given by the formula P(Q)= 226 - Q, while the supply function was P(Q) = 20 + Q (P - price in zloty, Q - quantity in 2 thousands). The market for books is purely competitive. The Value Added Tax (VAT) was not imposed on books. In 2012 the national elections took place and a change of government followed. The new government imposed a 5% VAT on books. How will this influence the market equilibrium conditions? a) P = 100; Q = 126 b) P = 103; Q = 97 () P = 108,15; Q =91,85 d) P = 152, Q = 48 e) None of the above

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