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Suppose the market for widgets can be described by the following equations: Demand: P=20 - Q Supply: P=2Q - 4 where P is the price
Suppose the market for widgets can be described by the following equations: Demand: P=20 - Q Supply: P=2Q - 4 where P is the price in dollars per unit and Q is the quantity in thousands of units. Then:
- What is the equilibrium price and quantity?
- Suppose the government imposes a tax of $2 per unit to reduce widget consumption and raise government revenues. What will the new equilibrium quantity be?
- What price will the buyer pay? What amount per unit will the seller receive?
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