suppose that supply is = , while demand is = , where P is price in euros
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Question:
suppose that supply is = , while demand is = , where P is price in euros per unit and Q is units of output per week.
a. In what kind of market might supply and demand curves like this arise?
b. Find the equilibrium price and quantity (using both algebra and a graph).
c. If buyers must pay a tax of = /, what happens to the quantity exchanged, the price buyers pay and the price sellers receive (net of the tax)?
d. How is the burden of the tax distributed across buyers and sellers and why?
e. How would the results have been different if the sellers were legally required to pay the tax?
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