A good’s price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are p
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Answer: Equilibrium quantity of garden hoses after the tax is imposed is 85000.
Explanation:
Given that,
Dead weight Loss = $22500
Tax amount per unit (t) = $3
Equilibrium quantity before tax, = 1,00,000 units
Equilibrium quantity after tax, = ?
Dead weight Loss =
22500 = 0.5 × 3 × (100000 - )
= 85000 units
∴ Equilibrium quantity of garden hoses after the tax is imposed is 85000.