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Assume that the supply for a product is given by the function: Qs = 20P and...

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Economics

Assume that the supply for a product is given by the function:Qs = 20P and the demand by Qd = 1000 - 5P, where P is the value andQ is the quantity of the product, respectively.

(a) Calculate the value and quantity of equilibrium.

(b) If the government decides to impose a tax of € 10, determinewhich curve will be moved and in which direction: i. if the tax iscollected by consumers. ii. if the tax is collected by theproducers (ie tax on production).

(c) The government has finally decided to impose a € 10 tax andthe tax will be collected by consumers. Identify the new equationof the curve that has shifted, due to the imposition of taxationand calculate the price and the amount of equilibrium, after theimposition of the tax of 10 €.

(d) Determine how much of the € 10 tax will be borne byconsumers and how much by producers. Explain your answer.

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