Question

Qd Qs Price (000s) (000s) 59.00 20 44 8.50 24 40 8.00 20 36 7.50 32 32 7.00 36 28 6.50 40 24 6.00 44 20 Quantity supplied after tax Qs(1) (000s) 1. What is the equilibrium price and quantity? 2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity supplied will be supplied only at a price of 59.00, so the Quantity supplied with a tax at 9.00 is 36000) You continue, so at $8.50, the producer only gets 7.50, so is only willing to offer 32000 units

          Qd
Qs
Price (000s) (000s)
59.00 20 44
8.50 24 40
8.00 20 36
7.50 32 32
7.00 36 28
6.50 40 24
6.00 44 20
Quantity supplied
after tax Qs(1)
(000s)
1. What is the equilibrium price and quantity?
2. Suppose the government imposes a tax of $1.00 on each water bottle. Complete the column showing quantity
supplied after the tax. (Hint: at a price of $8.00 the quantity supplied was 36000. With the tax, this quantity
supplied will be supplied only at a price of 59.00, so the Quantity supplied with a tax at 9.00 is 36000) You
continue, so at $8.50, the producer only gets 7.50, so is only willing to offer 32000 units

Qd
Qs
Price (000s) (000s)
59.00 20 44
8.50 24 40
8.00 20 36
7.50 32 32
7.00 36 28
6.50 40 24
6.00 44 20
Quantity supplied
after tax Qs(1)
(000s)
1. What is the equilibrium price and quantity?
2. Suppose the government imposes a tax of 1.00 on each water bottle. Complete the column showing quantity
supplied after the tax. (Hint: at a price of8.00 the quantity supplied was 36000. With the tax, this quantity
supplied will be supplied only at a price of 59.00, so the Quantity supplied with a tax at 9.00 is 36000) You
continue, so at 8.50, the producer only gets 7.50, so is only willing to offer 32000 units

Added by Jacqueline B.

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