Consider the following market for CFC-11, a known ozone-depleting substance: Demand: Q=15-1.5P Supply: Q=5+ 0.5P where P is price per pound. Assume the governmental authority imposes a $5 per pound excise tax on CFC-11, which shifts the supply function to Q' = 2.5+ 0.5P. Use this information for any or all of the next three questions below. a) What is the equilibrium price and quantity of CFC-11 before the excise tax?

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Consider the following market for CFC-11, a known ozone-depleting substance:
Demand: Q = 15 -1.5P
Supply: Q = 5 + 0.5P
where P is price per pound.
Assume the governmental authority imposes a $5 per pound excise
tax on CFC-11, which shifts the supply function to Q' = 2.5 + 0.5P. Use this
information for any or all of the next three questions below.
a) What is the equilibrium price and quantity of CFC-11 before the excise tax?
Transcribed Image Text:Consider the following market for CFC-11, a known ozone-depleting substance: Demand: Q = 15 -1.5P Supply: Q = 5 + 0.5P where P is price per pound. Assume the governmental authority imposes a $5 per pound excise tax on CFC-11, which shifts the supply function to Q' = 2.5 + 0.5P. Use this information for any or all of the next three questions below. a) What is the equilibrium price and quantity of CFC-11 before the excise tax?
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