. Suppose the untaxed market equilibrium price and quantity in the home computer market are $850 and 10 million, respectively. In the business market, the untaxed market equilibrium price and quantity are $1200 and 15 million, respectively. What is the deadweight loss of the $200 tax?
. Suppose the untaxed market equilibrium price and quantity in the home computer market are $850 and 10 million, respectively. In the business market, the untaxed market equilibrium price and quantity are $1200 and 15 million, respectively. What is the deadweight loss of the $200 tax?
Chapter6: Elasticity
Section: Chapter Questions
Problem 11QP: Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price...
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Question
![The elasticity of demand for home computers
is -2.5, the elasticity of demand for business
computers is -.90, and the elasticity of supply
for computers for both purposes is 1.
a. A per-unit tax of $200 is imposed on the
suppliers of computers. How much does the
gross price increase in each market? [Hint:
first find the tax incidence/shares.]
b. Suppose the untaxed market equilibrium price
and quantity in the home computer market
are $850 and 10 million, respectively. In the
business market, the untaxed market
equilibrium price and quantity are $1200 and
15 million, respectively. What is the
deadweight loss of the $200 tax?
Answer part B please!
Hand written asap](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faeffa2e6-21d0-49bc-b784-e3668fa4ce0e%2F9251bb7e-5850-4cee-8b24-210c45e26af5%2Fgn0jn8p_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The elasticity of demand for home computers
is -2.5, the elasticity of demand for business
computers is -.90, and the elasticity of supply
for computers for both purposes is 1.
a. A per-unit tax of $200 is imposed on the
suppliers of computers. How much does the
gross price increase in each market? [Hint:
first find the tax incidence/shares.]
b. Suppose the untaxed market equilibrium price
and quantity in the home computer market
are $850 and 10 million, respectively. In the
business market, the untaxed market
equilibrium price and quantity are $1200 and
15 million, respectively. What is the
deadweight loss of the $200 tax?
Answer part B please!
Hand written asap
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