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3) The market for the digital thermometers, faces demand of qd = 3 , and supply of q, = 20p, - 300
3) The market for the digital thermometers, faces demand of qd = 3 , and supply of q, = 20p, - 300. A tax of $2.50 per unit is imposed. Calculate the new market price(s) and quantity, tax revenue, and deadweight loss. Who bears the higher burden of this tax? How do you know?
4. A similar problem, but with a non-linear demand: the market for portable external mobile phone batteries faces demand, qd = 2000p1 (CED demand), and a linear supply curve of q, = 4-1 - ps - 5 where all quantities are in (where all quantities are in 10,000, so if your answer is 32.4512, then this implies 324,512 batteries). (a) Find the elasticities of demand and supply. (b) With a tax of $3.25 per unit, find the new quantity and price(s). (c) Who bears the higher burden? How do you know?
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