Suppose the inverse demand and inverse supply functions for a good are given as P= 200-0.5Q

and P= 20 + 0.5 Q.

1. Calculate the initial equilibrium price and quantity.

2. Draw the above inverse demand and inverse supply functions.

3. Suppose a per unit tax of $10.00 was levied on sellers. Determine graphically and algebraically the effect of the tax on the price paid by demanders, the price received by sellers, the total tax paid, and the fraction of the tax paid by buyers and the fraction paid by sellers.