Question

Suppose the weekly demand for a certain good in thousands of units, is given by the...

Suppose the weekly demand for a certain good in thousands of units, is given by the equation P = 35 - Q, and the weekly supply curve of the good by the equation P = 15 + Q where P is the price in dollars. Finally, suppose a per-unit tax of $6, to be collected from sellers is imposed in this market. Complete the following questions. Note: If necessary round your answers to two decimal places.

a) Graph the weekly demand, supply (pre-tax), and supply (post-tax) equations.

b) What is the equilibrium price before the tax?

Equilibrium Price = $0

c) What is the Consumer and Producer Surplus before the tax?
Note: Remember that the quantity of units on the graph are in thousands.

Producer Surplus = $0Consumer Surplus = $0

d) What is the new Consumer and Producer surplus after the tax is imposed?
Note: Remember that the quantity of units on the graph are in thousands.

Producer Surplus = $0Consumer Surplus = $0

e) How much government revenue will this tax generate a week?
Note: Remember that the quantity of units on the graph are in thousands.

Government Revenue = $0 per week

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