Question
The demand for bicycles in Michigan is given by = 200 and the supply of bicycles in Michigan is given by = 3. The demand
The demand for bicycles in Michigan is given by = 200 and the supply of bicycles in Michigan is given by = 3. The demand for helmets is given by = 100 2 and the supply of helmets is given by = 2. Both goods are currently untaxed, but the government of Michigan needs to raise $8,125 (to finance a new bike path) by taxing bicycles and helmets. Suppose that Michigan taxes bicycles $ per unit.
A. Determine the deadweight loss and marginal deadweight loss of the tax on bicycles. (*this will be a function of $)
B. Determine the tax revenue and marginal tax revenue of the tax on bicycles. (*this will be a function of $)
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