China Imports Inc. sold 10,000 units in May. Per unit selling price and variable expense were $23 and $15, respectively. Fixed e
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Answer:
- The Demand is given by
- The supply curve is by
Consumers will face a price of 33.29 and the equilibrium quantity will be 43.42.
These results illustrate that as a consequence of the tax, the price faced by consumers will be higher, quantity sold be lower, and producers will receive less for their product sale.
Explanation:
- The Demand is given by
- The supply curve is by
In the absence of taxes and
.
An ad-valorem tax generates now that
So the new equilibrium is
Replacing in the demand equation we get the equilibrium quantity