Answer to Question #310960 in Microeconomics for Jowi

Question

Given quantity demanded t

And supplied as q=36-1/3p and q=- 9+1/2p. If the government decide to impose a tax of 't" per unit supplied determine the value of tax

Answer 1

$q=36-\frac{1}{3}p$ (No tax)

$q=36-\frac{1}{3}(p-t)$ with tax

$q=- 9+\frac{1}{2}p$

$Q_s= Q_d$

$36-\frac{1}{3}(p-t)= - 9+\frac{1}{2}p$

$45+ \frac{1}{3}t= \frac{1}{3}P+ \frac{1}{2}P$

$\frac{1}{3}t= \frac{5}{6}P- 45$

$P= (45+ \frac{1}{3}t)\frac {6}{5}$

$P= 80+ \frac{2}{5}t$ .... price paid by consumers

$\therefore$ Consumers pay $\frac{2}{5}$ and the suppliers $\frac{3}{5}$