Calculating equilibrium price and quantity
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Let supply be given by P=5Q and demand by P=19-2Q.
A) What would be the equilibrium quantity and equilibrium price?
B) Suppose the Government imposes a $5 per unit tax on the seller, which equation would be affected and how?
C) What would be the new equilibrium quantity and price?
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Solution Summary
Solution describes the steps to calculate equilibrium price and quantity in case of no tax and in case Government imposes a tax of $5 per unit.
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A) What would be the equilibrium quantity and equilibrium price?
Supply curve is given by
P=5Q or Q=P/5
Demand curve is given by
P=19-2Q
2Q=19-P
Q=9.5-0.5P
In equilibrium Quantity demanded is equal to quantity ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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