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The supply of gazebos is given by P = 3 + 0.6Q; demand is given by P = 18. A specific tax of $6 per
The supply of gazebos is given by P = 3 + 0.6Q; demand is given by P = 18. A specific tax of $6 per unit is subsequently imposed and that shifts the supply curve to P = 9 + 0.6Q.
a)Solve for the equilibrium price and quantity before and after the tax.
Equilibrium price before tax = $
0
Equilibrium quantity before tax =
0
Equilibrium price after tax = $
0
Equilibrium quantity after tax =
0
b)Who bears the burden of the tax?
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