Explore BrainMass
Share

Calculating equilibrium price and quantity

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Use the following supply and demand functions to answer the questions below:
Qd = 20-2P, Qs = 5+3P

a. Determine the equilibrium price and quantity and illustrate with a graph.
b. The government imposes a tax of $5.00. Find the new equilibrium price and quantity.
c. Determine the total tax revenue earned by the government.

© BrainMass Inc. brainmass.com March 21, 2019, 10:00 pm ad1c9bdddf
https://brainmass.com/economics/demand-supply/equilibrium-price-quantity-presence-of-tax-400867

Solution Preview

Please refer attached file for the graph.

a. Determine the equilibrium price and quantity and illustrate with a graph.
In equilibrium Qd=Qs
20-2P=5+3P
15=5P
P=3
Qd=20-2*3=14
Qs=5+3*3=14
Equilibrium ...

Solution Summary

Solution describes the steps to calculate the equilibrium price and quantity with and without the presence of tax. It also calculates the tax revenue collected by the government.

$2.19