Suppose demand and supply are given by QXd = 14 – (1/2)PX and QXs = (1/4)PX – 1
Instructions: Round your answers to the nearest whole number.
a. Determine the equilibrium price and quantity. Show the equilibrium graphically.
Instruction: Use the tools provided to graph the inverse supply function ‘S’ and the inverse demand function ‘D’ from X = 0 to X = 6 (two points total for each) and indicate the equilibrium point.
b. Suppose a $12 excise tax is imposed on the good. Determine the new equilibrium price and quantity.
c. How much tax revenue does the government earn with the $12 tax?