Question

ke Suppose that a certain product has the following demand and supply functions D: p = – 0.05 g + 65 S: p = 0.05 q + 10 If a $ 5 tax per item is placed on the product, the market equilibrium point after tax is (400 , 50) (40 , 500) (500 40) (50 ,400)

Please Solve As soon as
Solve quickly I get you thumbs up directly
Thank's
Abdul-Rahim Taysir

Answer 1

Demand function is given by: D: p=-0.05q+65 Supply function is given by: S: p=0.052+10 .::$5 tax is placed on per item : S:p=0.059+10+5=0.059 + 15 To find the equilibrium point, we have to set: DES => -0.059+ 65 =0.05q+15 => -0.054 -0.059=15 – 65 => -0.19= -50 50 =>q= 0.1 =>q=500 At q=500 p=-0.05(500) + 65 = 40 Hence: Market euilibrium point after tax is (500, 40)