Answer to Question #159287 in Microeconomics for Imoleayo

Question

1. Consider the market for ponche, a alcoholic wine. the demand is characterized by the following equation. Pd = 100 - Qd the supply is given by Ps = 0.25Qs

• determine the equilibrium quantity and price?
• Suppose the ad valorem tax of 10% is imposed on buyers of the wine, graphically sketch the behavior of the demand and supply curves.
• what is the new equilibrium price and quantity?
• what is the price that buyers pay and supplies get ?
• Also determine the tax revenue and tax incidence on the buyers and sellers

Answer 1

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