5 1. Consider the following demand and supply functions:Q4 1000 -2P(Demand)Q =-500 + 3P (Private Supply)O =-800 + 3P (Social Supply)%3!and the following panels.PalPalPaPrePricePeDGuaPaneltQuanlyPQuertityQuantyQuentitya. Which panel best shows this case? Justify your answer.b. Find the private market clearing quantity anid price and social quantity and price. Justify youranswer.C. Find the tax necessary to set demand equal to social supply. Justify your answer.d. Find the change in producer surplus, the change in consumer surplus and the tax revenues andthe net social loss (net social gain) for this tax Justify your answer.

Disclaimer: Since it is a multiple part question, I am providing the answer to the first three…

1. Consider the following demand and supply functions: Q- 1000 - 2P (Demand) Q --500 + 3P (Private Supply) (Social Supply) Q--800 + 3P and the following panels. Fal Pal Pe Pae Panelt Quentily Quy Qunty Qany a. Which paneol best shows this case? Justify your answer. b. Find the private market clearing quantity and price and social quantity and price. Justify your answer. C. Find the tax necessary to set demand equal to social supply. Justify your answer. Sumlus and the tax revenues and

1. Consider the following demand and supply functions: Q- 1000 - 2P (Demand) Q --500 + 3P (Private Supply) (Social Supply) Q--800 + 3P and the following panels. Fal Pal Pe Pae Panelt Quentily Quy Qunty Qany a. Which paneol best shows this case? Justify your answer. b. Find the private market clearing quantity and price and social quantity and price. Justify your answer. C. Find the tax necessary to set demand equal to social supply. Justify your answer. Sumlus and the tax revenues and

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 7PA

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