The demand and supply functions for hockey sticks are given by

QD = 286 - 20P

QS = 88 + 40P

In order to raise revenue to finance minor hockey so that

Canada can continue its gold medal streak at the Olympics, the federal

government decides to impose a tax of $2 per hockey stick sold, to be paid by

the buyers of hockey sticks. (Show all your work, calculations and diagrams)

a. Determine the equilibrium price and quantity of hockey

sticks both before and after the tax. How is the burden of the tax shared

between buyers and sellers?

b. How many hockey sticks would be sold before the tax is

imposed? After the tax?

c. Graph the supply and the demand curves for hockey

sticks both before and after the tax, clearly showing the intercepts and

equilibrium outcomes.

d. What would happen if the tax were paid by

the sellers of hockey sticks instead of the buyers? Repeat the steps you did

when the tax was paid by the buyer and find the quantity of hockey sticks sold

as well as the burden of buyers and sellers.

Business,Economics,Microeconomics