The inverse demand function for grapefruit is defined by the equation p = 282 - 9q, where q is the number of units sold.The inverse supply function is defined by p = 7 + 2q.A tax of $22 is imposed on suppliers for each unit of grapefruit that they sell.When the tax is imposed, the quantity of grapefruit sold falls to
A)25
B)14
C)21
D)23
E)24.

Question

Quizplus · Accepted Answer

The correct answer is D.The tax of $22 per unit shifts the supply curve upward by $22, so the new supply curve is p = 29 + 2q. The equilibrium quantity is found by solving the new supply and demand equations simultaneously:282 - 9q = 29 + 2q-11q = -253q = 23

The Inverse Demand Function for Grapefruit Is Defined by the Equation