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Suppose that the demand for good X is Q=600-15P and that the competitive market equilibrium price is P*=24 (With a horizontal market supply curve). The
Suppose that the demand for good X is Q=600-15P and that the competitive market equilibrium price is P*=24 (With a horizontal market supply curve). The government considers implementing a tax rate of 15%. a) Calculate the elasticity of demand at the equilibrium market price without tax. b) Use the formula with elasticity of demand to calculate the deadweight loss from the tax (please do not use any other way). c) What is the government tax revenue?
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