Managerial Economics & Organizational Architecture 5th Edition by James Brickley, Jerold Zimmerman, Clifford Smith

تمرين 22

Assume that the demand curve for sporting guns is described by

a. Compute the competitive equilibrium price and quantity. Draw a graph of a supply and demand curve and label it correctly. Compute the total value created in the market for sporting guns ( hint: total value = consumer surplus + producer surplus).
b. Suppose that the government views sporting guns as a luxury product and taxes the consumers $6 for each sporting gun they buy. Solve the new competitive equilibrium. What losses do consumers of sporting guns incur as a result of the tax What losses, if any, do the producers of sporting guns incur