Question

The supply equation for a certain product is q−200p+1600=0q−200p+1600=0. The demand equation is 300p+q−4800=0300p+q−4800=0. The price pp is in dollars.

(a) Find the equilibrium point:
Quantity q= . Price p= $
(b) Suppose a tax of $2 per unit is imposed on the supplier. Find the new equilibrium point.
Quantity q= . Price p= $

Answer 1

The equilibrium point occurs when the quantity demanded is equal to the quantity supplied. The equilibrium point is q = 3600 and p = 13. If a tax of $2 per unit is imposed on the supplier, the new equilibrium point is q = 3400 and p = 11.

Step-by-step explanation:

The equilibrium point occurs when the quantity demanded is equal to the quantity supplied.

To find the equilibrium point, we can solve the system of equations:

q - 200p + 1600 = 0 (supply equation)

300p + q - 4800 = 0 (demand equation)

Solving these equations, we get q = 3600 and p = 13.

(a) The equilibrium point is q = 3600 and p = 13.

(b) If a tax of $2 per unit is imposed on the supplier, the supply equation becomes q - 200(p+2) + 1600 = 0. Solving this equation along with the demand equation, we get q = 3400 and p = 11.

(b) The new equilibrium point is q = 3400 and p = 11.