Question

Suppose the market for grass seed can be expressed as: Demand: QD = 200 - 5p

Supply: QS = 40 + 5p

1. 3.1 Calculate the price and quantity in equilibrium

2. 3.2 If the government collects a $5 specific tax from sellers, how much will the quantity

demanded change from the amount demanded before the tax? What price will consumers pay after the tax? What price will sellers receive after the tax? What is the tax revenue?

3.3 Draw the graph with demand and supply without tax and show on the graph the effect of the tax wedge and the price and quantity of equilibrium with the tax.

can you please answer question 3.2 and 3.3

Answer 1