Question #59619

Tax. Determine the SWL.

D: P = 440 - 2Q

S: P = 40 + 2Q

Tax: P = 80Q

D: P = 440 - 2Q

S: P = 40 + 2Q

Tax: P = 80Q

Expert's answer

If demand and supply functions are:

D: P = 440 - 2Q

S: P = 40 + 2Q

And tax function is P = 80Q, then:

quantity demanded is 440 - 2Q = 80Q,

82Q = 440,

Q = 5.37 units.

quantity supplied is 40 + 2Q = 80Q,

78Q = 40,

Q = 0.51 units.

So, the SWL is 5.37 - 0.51 = 4.86 units.

D: P = 440 - 2Q

S: P = 40 + 2Q

And tax function is P = 80Q, then:

quantity demanded is 440 - 2Q = 80Q,

82Q = 440,

Q = 5.37 units.

quantity supplied is 40 + 2Q = 80Q,

78Q = 40,

Q = 0.51 units.

So, the SWL is 5.37 - 0.51 = 4.86 units.

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