These next five problems consider tax incidence. Suppose the market supply and demand for guitars in Happy Valley are given by:

Demand: P = 300 - (1/2)Q

Supply: P = 100 + (1/3)Q

What is the equilibrium price and quantity of the product?

P* = 120, Q* = 1200

P* = 180, Q* = 240

P* = 60, Q* = 480

P* = 225, Q* = 150

none of the above

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Question 17

2pts

What is the price elasticity of demand at the equilibrium price?

Elasticity = -1

Elasticity = -2

Elasticity = -0.5

Elasticity = -0.666

none of the above

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Question 18

2pts

For the next three questions, assume there is $20 per unit tax levied on the consumers of guitars. What price will buyers pay after the tax is imposed?

$192

$200

$160

$190

none of the above

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Question 19

2pts

What is the quantity of the good that will be sold after the tax is imposed?

196

210

224

216

none of the above

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Question 20

2pts

What is the deadweight loss created by the tax?

DWL = $360

DWL = $120

DWL = $240

DWL = $480

none of the above