Question: consider a market described by the following equations where y...
Consider a market described by the following equations:
Where Y denotes income and
must be less than zero
other parameters are positive
Answer the following questions.
for the equilibrium price and
Now suppose a specific tax,
, is imposed on this market that has to be paid to the government by
suppliers. How can you represent the
paid by buyers
price paid by sellers? S
for the price paid by
buyers, the price paid by sellers, and the after tax equilibrium quantity.
suppose the same tax from part (b) is changed so that it must be paid to the government by
How can you represent the
price paid by buyers and the
price paid by sellers? Solve for
the price paid by buyers, the price paid by sellers, and the after ta
x equilibrium quantity.
Compare your answers to parts (b)
and (c). Provide a brief explanation (no more than 3 sentences) for
your results. Note your answer will be related to the logic of problem 2 part (d), you might want to work
through that problem before you answer this