contestada

Suppose that the demand curve for chairs in Euroland is given by QD = 800,000 − 6,000P, and that the supply curve is given by QS = 14,500P - 225,000. The equilibrium price is €50. The government is thinking about imposing a tax of €10 on chairs. The price received by suppliers after the tax is

Respuesta :

ajeigbeibraheem

Answer:

€57.07

Explanation:

Given that:

The equilibrium price = € 50

Suppose that the government is imposing tax of  €10 on chairs;

Then:

QS = 14500(P-10) - 225000

QS = 14500P- 145000 - 225000

QS = 14500P - 370000

Now, we have to equate QD with the new QS

By equating both together, we have:

800000 - 6000P = 14500P - 370000

Collect like terms

800000 + 370000 = 14500P + 6000P

1170000 = 20500P

Making P the subject of the formula;

P = 1170000/20500

P = € 57.07

This implies the price  received by suppliers after the tax is  €57.07.

Q&A Education