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

Demand: P = 1000 - 0.25Q

Supply: P = 200 + Q

What is the equilibrium price and quantity of the product?

Group of answer choices

P* = 840, Q* = 640

P* = 733.25, Q* = 1067

P* = 760, Q* = 960

P* = 800, Q* = 600

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Question 17

2pts

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

Group of answer choices

Elasticity = -2

Elasticity = -3.333

Elasticity = -5.25

Elasticity = -0.5

none of the above

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Question 18

2pts

For the next three questions, assume there is $10 per unit tax levied on the consumers of guitars. What price will buyers pay after the tax is imposed?

Group of answer choices

$850

$842

$830

$855

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?

Group of answer choices

630

640

626

632

none of the above

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Question 20

2pts

What is the deadweight loss created by the tax?

Group of answer choices

DWL = $80

DWL = $8

DWL = $10

DWL = $64

none of the above