The demand and supply of movie tickets are given by Q^D = 30 - 3P and Q^S = 4P - 19, where P is the price per ticket and Q is in thousands of tickets. If the government places a $1 tax on each ticket, the prices that consumers pay with and without the tax are _____ and _____, respectively. A) $8; $7 B) $7.57; $7 C) $7.50; $6.50 D) $4.30; $3.80

Question

Quizplus · Accepted Answer

Without the tax, set Q^D = Q^S: 30 - 3P = 4P - 19, solving gives P = $7. With a $1 tax, the supply equation becomes Q^S = 4(P-1) - 19, solving with Q^D gives P = $7.57.

The Demand and Supply of Movie Tickets Are Given by QD

The Demand and Supply of Movie Tickets Are Given by Q^D