Suppose the demand and supply are given by
Qdx = 14 – ½ Px and Qsx = ¼ Px – 1
a. Determine the equilibrium price and quantity. Show the equilibrium graphically.
b. Suppose the $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity.
c. How much tax revenue does the government earn with the $12 tax?
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