Incidence of Taxation Problem

Assuming the following Supply and Demand Functions:

Qs = -8 +6P
Qd = 37 3P
Find:
1. Create a Supply and Demand schedule for prices $0, $1, $3, $5, $7, $9
Price
$0
$1
$3
$5
$7
$9

Qs = -8 + 6P
-8
-2
10
22
34
46

Qd = 37 3P
37
34
28
22
16
10

2. Plot each of the points on a graph.

3. Find and show market equilibrium Price and Quantity.
Qs = Qd
-8 + 6P = 37 3P
9P = 45
P = $5
Qs = -8 + 6P
Qs = -8 + 6(5)
Qs = -8 + 30
Qs = 22
4. A specific tax of $2 per good. Write the new Supply function and plot the
curve labeling it S + Tax.
Qs1 = -8 + 6(P 2)
Qs1 = -8 + 6P 12
Qs1 = -20 + 6P

Incidence of Taxation Problem

5. Find and show the new market equilibrium Price and Quantity.
Qs1 = Qd
-20 + 6P = 37 3P
9P = 57
P = $6.33
Qd = 37 3P
Qd = 37 3(6.33)
Qd = 18.01 or 18 units
6. Show and identify the change in Producer Surplus, Consumer Surplus, Total
Welfare Loss and the area of the tax.
See me with your worked solutionsneed a graph to show and explain.
Also, shows me if you even look at any of the work I post on Weebly!!!
7. Calculate the amount of tax paid by the Consumers and Producers.
Consumer Incidence
(New Equilibrium Price Original Equilibrium Price) x New Quantity
($6.33 - $5) x 18
$23.94
Producers Incidence
(Original Equilibrium Price Price Producer Receives) x New Quantity
($5 ($6.33 - $2)) x 18
($5 - $4.33) x 18
0.77 x 18
$13.86
8. Calculate the Total Revenue earned by Producers
a. Before the tax.
Total Revenue = (Original Price Equilibrium x Original Quantity Equilibrium)
Total Revenue = $5 x 22
Total Revenue = $110
b. After the tax.
Total Revenue = ((New Equilibrium Price tax) x New Equilibrium Quantity)
Total Revenue = ($6.33 - $2) x 18
Total Revenue = $4.33 x 18
Total Revenue = $77.94