Suppose That Instead of a Supply-Demand Diagram, You Are Given

question 26

Essay

Suppose that instead of a supply-demand diagram, you are given the following information:
Q_s = 100 + 3P
Q_d = 400 - 2P
From this information compute equilibrium price and quantity. Now suppose that a tax is placed on buyers so that
Q_d = 400 - 2(P + T).
If T = 15, solve for the new equilibrium price and quantity. (Note: P is the price received by sellers and P + T is the price paid by buyers.) Compare these answers for equilibrium price and quantity with your first answers. What does this show you?

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Definitions:

Industrial Output

The total value of the goods and services produced by a country's industrial sector.

Insufficient Capital

Insufficient Capital refers to a situation where an individual or entity lacks the necessary financial resources or funding to support its operations, investments, or growth plans.

Economic Growth

An increase in the total output of an economy. Growth occurs when a society acquires new resources or when it learns to produce more using existing resources.

Free Trade

The unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas.