Consider the competitive market where demand is P=20-.25Q and supply is P=3+.5Q.
a) Analyze the effects on the equlibrium quantity, producer price Pn, and consumer price Pg of a $1 per unit tax on producers. What is the tax revenue?
b) Analyze the effects on the equlibrium quantity, producer price Pn, and consumer price Pg of a 20% ad valorem tax on producers. What is the tax revenue?
c) Analyze the effects on the equlibrium quantity, producer price Pn, and consumer price Pg of a $1 per unit subsidy to consumers. What is the cost to the government?