(Advanced analysis)Answer the question on the basis of the following information: The equations for the demand and supply curves for a particular product are P = 10 - .4Q and P = 2 + .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 + .4Q. Refer to the given information.The equilibrium quantity before the excise tax is imposed is:

Question

Quizplus · Accepted Answer

To find the equilibrium quantity before the excise tax is imposed, we need to set the quantity demanded (Qd) equal to the quantity supplied (Qs) and solve for Q.

Quantity demanded: P = 10 - 0.4Q
Quantity supplied before the tax: P = 2 + 0.4Q

10 - 0.4Q = 2 + 0.4Q
8 = 0.8Q
Q = 10 units of 100, or 1000 units.

Therefore, the equilibrium quantity before the excise tax is imposed is 1000 units.

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