Essay
Suppose the market for soda is represented by the supply and demand equations:
QS = 35P - 39.75 and QD = 10.25 - 5P, where P is price per bottle and Q measures bottles per second.
a. What are the values of consumer and producer surplus?
b. If the government imposes a $0.50 tax per bottle, what are the values of consumer and producer surplus?
c. What is the deadweight loss from the tax? How much revenue does the tax yield?
Correct Answer:
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a. Set QD = QS and solve for P.
10.25 - 5P...View Answer
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Correct Answer:
Verified
10.25 - 5P...
View Answer
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