7.7. Sales tax. Consider an industry with market demand. Q = 550-20p and market supply Q = 100+10 p. Determine the equilibrium price and quantity. Suppose the government imposes a tax of $6 per unit to be paid by consumers. What is the impact on equilibrium price and quantity? What if the sales tax is paid by the seller instead of the buyer?

7.7. Sales tax. Consider an industry with market demand. Q = 550-20p and market supply Q = 100+10 p. Determine the equilibrium price and quantity. Suppose the government imposes a tax of $6 per unit to be paid by consumers. What is the impact on equilibrium price and quantity? What if the sales tax is paid by the seller instead of the buyer?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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