(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 after the excise tax is imposed is:

Question

Quizplus · Accepted Answer

To find the equilibrium quantity after the excise tax is imposed, we need to find where the new supply curve (P = 3 + .4Q) intersects with the original demand curve (P = 10 - .4Q).

Set the two equations equal to each other:
10 - .4Q = 3 + .4Q

Solve for Q:
10 - 3 = .4Q + .4Q
7 = .8Q
Q = 8.75 (multiply by 100 to get units)

So the equilibrium quantity after the excise tax is imposed is 875 units.

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