Consider a competitive market with demand given by PD = 100 ? 2Q and supply given by PS = 10 + Q.?

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Question
Jcalhoun
Asked at 2012-08-16 17:52:03
a) Find the competitive equilibrium price and quantity of P? and Q? . What is the consumer and producer surplus ?
b ) Suppose the government introduces tax unit as t = 15 to the producers. Find the amount sold in the market after tax of Qt. Find the price paid by consumers of Pt and the price received by producers after tax of PS.
c ) Calculate consumer and producer surplus , the tax paid by consumers , taxes paid by producers, and total revenue for the government , finding the deadweight loss associated with

taxes. d ) Calculate the price elasticity of supply and demand in the competitive market equilibrium by point elasticity formula . Now calculate what percentage of income tax is paid by consumers and what percentage is paid by producers. What can you say about
the relationship between the elasticity of supply and demand and the shares of taxes paid by consumers and producers?
e) Show results in a diagram. In particular indicate the competitive balance after the amount of taxes and prices after excise tax and producer surplus , government revenue and deadweight loss
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