Suppose the original before-tax demand curve for CD players is [Math Processing Error]P=100−2Qd

Marketing Jan 09, 2021

Suppose the original before-tax demand curve for CD players is [Math Processing Error]P=100−2Qd. Suppose further that supply is [Math Processing Error]P=5+3Qs. Now suppose a $5 unit tax is imposed on consumers.

a. What is the before-tax equilibrium price and quantity?

b. What is the after-tax equilibrium prices and quantity?

c. How much tax revenue is raised?

d. Would the answer in b change if the tax was levied on suppliers? Why or why not?

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