The annual demand for liquor in a certain state is given by the following equation: Qp=500.000-20.00OP where Pis the price per gallon and QD is the quantity of gallons demanded per year. The supply of liquor is given by the equation Qs=30.000P. Now assume that a unit tax of 1$ is levied on the sellers of the commodity (i.e. statutory incidence is on the producers).

The annual demand for liquor in a certain state is given by the following equation: Qp=500.000-20.00OP where Pis the price per gallon and QD is the quantity of gallons demanded per year. The supply of liquor is given by the equation Qs=30.000P. Now assume that a unit tax of 1$ is levied on the sellers of the commodity (i.e. statutory incidence is on the producers).

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 7P

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