Price elasticity of Demand – Problems
Suppose demand is p = 20 – 2QD and supply is p = 2 + 2QS. The government enacts a $2 per unit tax. What is the post-tax equilibrium quantity?
New Supply curve =
P-2 = 2+2Qs
So, equating both the demand and new supply curve,
So, Q = 4
So,the post tax equilibrium quantity is 4 units
- Suppose demand is p = 20 – QD and supply is p = 2 + QS. The government enacts a $2 per unit tax. What is the deadweight loss of the tax?
- Suppose demand is p = 10 – 2QD. What is the price elasticity of demand at p = $6 and QD = 2?
- Suppose the price elasticity of demand is 2. What is the percent change in price that lowers demand by 30%?
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