The HST can only be charged once on a good. This means that new homes are subject to the HST (13% in Ontario) while resale homes are tax exempt. Suppose that the zero-tax demand (D) and supply curves (S) for new homes in London Ontario is illustrated as below. 1.Find the linear equations that represent the inverse demand curve (P = f(Q) and inverse supply curve (p =g(Q?) that represent the illustrated demand and supply curves. 2. Suppose the 13% HST is imposed. Show how this tax alters the equation of the inverse supply curve and find the new market equilibrium price that home buyers pay for new homes and the quantity of homes sold. 3. Precisely estimate how much tax the government collects from the HST on the sale of new homes

The HST can only be charged once on a good. This means that new homes are subject to the HST (13% in Ontario) while resale homes are tax exempt. Suppose that the zero-tax demand (D) and supply curves (S) for new homes in London Ontario is illustrated as below. 1. Find the linear equations that represent the inverse demand curve (P = f(Q)) and inverse supply curve (p - 8(0)) that represent the illustrated demand and supply curves. 2. Suppose the 13% HST is imposed. Show how this tax alters the equation of the inverse supply curve and find the new market equilibrium price that home buyers pay for new homes and the quantity of homes sold. 20 3. Precisely estimate how much tax the government collects from the HST on the sale of new homes. P (x$1,000)| 1,800 S 1,600 1,400 1,200 1,000 800 600 400 200 D 100 200 300 400 500 600 700 800 900 1,000 Q (new homes)