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Unformatted text preview: sub-2 P comp +4 Inc Q s = 10 P + 3 Wea 5 Cost + 2 Tech Where Q d : quantity demanded P: price of product P sub : price of products closest substitute (average = 2) P comp : price of products closest complement (average = 40) Inc: income (average = 25) Q s : quantity supplied Wea: weather index (average = 10) Cost: cost producing Q (average = 2) Tech: technology variable (average = 10) (a) Solve for the equilibrium quantity and price given the averages for the supply and demand variables given in the parentheses (b) The government decides to impose a per unit tax on the buyer of this item equal to $3. Solve for the new equilibrium price and quantity (hint: convert the supply and demand functions into the price inverse form) (c) What is the tax incidence between consumers and producers of this product?...
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- Fall '07