Demand for ice-cream: P = 800 – 2Qd
Supply of ice-cream: P = 200 + Qs
(a) What is the equilibrium price and quantity?
(b) What will be the newe quilibrium price and quantity if a per unit tax of $10 is levied on producers of ice-cream.
(c) What are the consumer surplus and producer surplus once tax is imposed?
(d) What is the deadweight loss?
(e) Which parties – consumers or producers – shoulder a larger tax burden?
Demand for ice-cream: P = 800 – 2Qd
Supply of ice-cream: P = 200 + Qs
(a) What is the equilibrium price and quantity?
(b) What will be the newe quilibrium price and quantity if a per unit tax of $10 is levied on producers of ice-cream.
(c) What are the consumer surplus and producer surplus once tax is imposed?
(d) What is the deadweight loss?
(e) Which parties – consumers or producers – shoulder a larger tax burden?