Refer to the figure below. Suppose the original before-tax demand curve for CD players is P = 100 - 2Q d . Suppose further that supply is P = 5 + 3Q s . Now suppose a $5 unit tax is imposed on consumers.
(A) What is the before-tax equilibrium price and quantity?
(B) What is the after-tax equilibrium price and quantity?
(C) How much tax revenue is raised?
(A) Setting before-tax demand equal to supply gives Q* = 19, with P* = $62.
(B) The after-tax demand curve is now P = 95 - 2Q d . Setting the after-tax demand curve equal
to supply gives Q* = 18, and P* = 59.
(C) Tax revenue is the after-tax equilibrium quantity multiplied by the tax rate. Therefore, $5 ×
(18) = $90.
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In the above figure, if this natural monopolist were unregulated, the profit maximizing firm would sell the product at the price
A) A. B) B. C) C. D) F.
Which of the following is a macroeconomic factor that contributed to the financial crisis in 2007?
A) Global saving and investment imbalances B) Financial market innovation C) Deeper levels of integration across financial markets D) Challenges and failures in financial regulation