Question

Suppose that a market is described by the following supply and demand equations:
Qs=2P
Qd=300-P


a. Solve for the original equilibrium price and the original equilibrium quantity.

b. Suppose that tax of $3.00is placed on buyers, so the new demand equation is
Qd=300-(P+ 3)

1-Solve for the new equilibrium price and Qty.

2-Solve for the seller’s price. What happens to the price the sellers received?

3-Solve for the buyers price. What happens to the price paid by the buyers?

4-Solve for the qty sold after tax. What happens to the quantity sold after tax?
c. How much tax revenue is generated by the government?
d. Calculate the deadweight loss?