a) Setting QD=QS
12-P=2P
12=3P
P = 12/3 = 4
Q = 12-4 = 8
CS =area AEB= 0.5*8*(12-4) = 32
PS =area BEC= 0.5*8*(4-0) = 16
b) When a tax of $3 is introduced, the supply curve will shift upwards by $3 at each price level
1) Buyers will pay $6
Consumers burden = (6-4)/3*100 = 66.67%
Seller will receive $3
Producers burden = (4-3)/3*100 = 33.33%
2) New CS = area AFG = 0.5*6*(12-6) = 18
New PS = area IHC = 0.5*6*(3-0) = 9
Tax revenue = area GFHI = 6*3 = 18
DWL = area FEH = 0.5*(8-6)*(6-3) = 3
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