Consider a market with a demand curve of P = 15 - q and a supply curve of P = 2q.If the government levies a tax on consumers of $3 per unit, what is the equilibrium quantity traded in the market.

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Quizplus · Accepted Answer

With a tax on consumers, the demand curve effectively shifts, reflecting the decrease in what consumers are willing to pay by the amount of the tax. The new demand equation, accounting for the $3 tax, becomes P = 12 - q (since consumers' willingness to pay is now $3 less at each quantity). To find the equilibrium quantity, set the new demand equal to supply: 12 - q = 2q. Solving for q gives q = 4.

Consider a Market with a Demand Curve of P =