(Advanced analysis) The equations for the demand and supply curves for a particular product are P = 10 − 0.4Q and P = 2 + 0.4Q, where P is price and Q is quantity expressed in units of 100.After an excise tax is imposed on the product, the supply equation is P = 3 + 0.4Q.Government's revenue from this tax is

Question

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The government's revenue from the tax is equal to the difference between the price consumers pay and the price producers receive, multiplied by the quantity sold. Before the tax, the equilibrium price was P = 10 − 0.4Q and the equilibrium quantity was Q = 25. After the tax, the equilibrium price is P = 3 + 0.4Q and the equilibrium quantity is Q = 15. Therefore, the government's revenue from the tax is (3 + 0.4Q) - (10 - 0.4Q) * 15 = 875.

(Advanced Analysis) the Equations for the Demand and Supply Curves