Explain what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well)
- a. The price of Coke decreases.
- b. Average household income falls from $50,000 to $43,000
- c. There are improvements in soft-drink bottling technology.
- d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign.
Use the following equations for demand and supply to solve for market equilibrium price and quantity:
- Demand: Qd = 100 - 4P
- Supply: Qs = 10 + 6P
. Using the diagram below, answer the following questions:
- a. How much is the per-unit tax on cigarettes?
- b. What price do consumers pay after the tax?
- c. How much tax revenue is collected?
- d. What is the amount of deadweight loss?