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Suppose the demand and supply curves for electric scooters in a city are as follows, where p is in $ and Q is in thousands

Suppose the demand and supply curves for electric scooters in a city are as follows, where p is in $ and Q is in thousands of scooters per year:

QD= 12,500 - 2pBQS= 2,500 + 8pS

  • Calculate market equilibrium p*:$
  • Calculate market equilibrium Q*:
  • Calculate the price elasticity of demand at the equilibrium:

Suppose the city introduces a tax of $125 per scooter to discourage scooter congestion, collected from the sellers:

  • Calculate net-of-tax equilibrium price paid by buyers: $
  • Calculate net-of-tax equilibrium price received by sellers: $
  • Calculate after-tax equilibrium quantity:
  • Of the $125 tax, how much is paid by buyers?: $

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