Unformatted text preview: 2. (15 points) Suppose market demand is given by P = 120 – 2Q and market supply is given by P = 2Q + 20. a. What is the market equilibrium price and quantity? b. Now suppose the government provides an excise tax of $10 per unit. What will the new equilibrium quantity be? What price will the buyer pay? What price will the seller receive? c. How much is the deadweight loss due to the tax?...
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 Spring '11
 zh
 Deadweight Loss, Supply And Demand, new equilibrium quantity, inverse market demand

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