2. Suppose demand and supply are given by Qdy = 7-P and Qsx =P- %3D a. Determine the equilibrium price and quantity and interpret your answer clearly. b. Suppose a $6 excise tax is imposed on the good. Determine the new equilibrium price and quantity. c. Show the existing and new equilibrium graphically, given that there is an excise tax imposed on the good. Also, interpret your graph briefly (1 to 2 sentences only). d. Given the $6 excise tax, how much is the consumer and producer surpluses? Interpret your result (1 sentence only). e. Given the $6 excise tax, how much is the deadweight loss? Interpret your result (1 sentence only).

2. Suppose demand and supply are given by Qdy = 7-P and Qsx =P- %3D a. Determine the equilibrium price and quantity and interpret your answer clearly. b. Suppose a $6 excise tax is imposed on the good. Determine the new equilibrium price and quantity. c. Show the existing and new equilibrium graphically, given that there is an excise tax imposed on the good. Also, interpret your graph briefly (1 to 2 sentences only). d. Given the $6 excise tax, how much is the consumer and producer surpluses? Interpret your result (1 sentence only). e. Given the $6 excise tax, how much is the deadweight loss? Interpret your result (1 sentence only).

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter5: Markets In Motion And Price Controls

Section: Chapter Questions

Problem 10P

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