(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. The excise tax on each unit of the product

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Quizplus · Accepted Answer

The excise tax is the difference between the old supply curve and the new supply curve at any given quantity. At Q = 0, the old supply curve is P = 2 and the new supply curve is P = 3, so the excise tax is $1.

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