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QD = 600 - 100P; QS = -150 + 150P, where P is price in dollars, Q D is quantity demanded in millions of gallons per year, and Q S is quantity supplied in millions of gallons per year.
1.Create demand and supply tables corresponding to these equations and determine equilibrium price and quantity.
Now suppose the U.S. government imposes a $1 per gallon of milk tax on dairy farmers.
2.Using the demand and supply equations from question 1: What is the effect of the tax on the supply equation? The demand equation? What is the new equilibrium price and quantity?
3.How much do dairy farmers receive per gallon of milk after the tax? How much do demanders pay?
Now suppose the tax is placed on the buyers of milk. Does it matter who pays the tax?
Now repeat questions 2 and 3 assuming the government pays a subsidy of $1 per gallon of milk to farmers.

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What is the effect of the tax on the supply equation? The demand equation? What is the new equilibrium price and quantity?

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