The figure below shows the demand and supply of a certain product. a) If this depicts an unregulated market what would be the equilibrium price and quantity?
b) If this product was taxed by an amount equal to the external costs, what would be the equilibrium price and quantity?
c) Alternatively, if buyers of this product were subsidized by an amount equal to the external benefits, what would be the equilibrium price and quantity?
d) Finally, if this product were both taxed and subsidized by an amount equal to the external costs and benefits, what would be the equilibrium price and quantity?

Question

The figure below shows the demand and supply of a certain product.  a) If this depicts an unregulated market what would be the equilibrium price and quantity?
b) If this product was taxed by an amount equal to the external costs, what would be the equilibrium price and quantity?
c) Alternatively, if buyers of this product were subsidized by an amount equal to the external benefits, what would be the equilibrium price and quantity?
d) Finally, if this product were both taxed and subsidized by an amount equal to the external costs and benefits, what would be the equilibrium price and quantity?

Quizplus · Accepted Answer

The Answer of The figure below shows the demand and supply of a certain product.  a) If this depicts an unregulated market what would be the equilibrium price and quantity?
b) If this product was taxed by an amount equal to the external costs, what would be the equilibrium price and quantity?
c) Alternatively, if buyers of this product were subsidized by an amount equal to the external benefits, what would be the equilibrium price and quantity?
d) Finally, if this product were both taxed and subsidized by an amount equal to the external costs and benefits, what would be the equilibrium price and quantity?

The Figure Below Shows the Demand and Supply of a Certain