Question 20 Not yet answered the good and Qd is the quantity of the good demande

Question

Question 20 Not yet answered the good and Qd is the quantity of the good demanded. The supply curve for the good is given by the linear Points out of 1.00 P Flag questioncompetitive equilibrium? The demand curve for a good is given by the linear function Qg 60-P, where P is the price buyers pay for function Q, 2P where P is the price sellers receive for the good and Q, is the quantity of the good supplied. If a tax of $6 per unit is levied on sellers of the good, what will happen to the market price of the good in Select one: a. The price will rise b. The price will fall by $4. c. The price will rise by $6. d. The price will not change. e. The price will fall by $2.

Explanation / Answer

Now the supply function will be

Q = 2(P-6)

Q = 2P -12.

At equilibrium supply = Demand

2P -12 = 60 –P

3P = 72

P = 24.Originally price was 20. So the seller will receive P= 24-6 = 18. The effective price for seller will fll by $2.

Therefore the correct answer is option e

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