## Calculating impact of a tax - numerical

Assume a linear demand function of the form:

**Qd = 80 - 5P**

and a linear supply curve of the form:

**Qs = -10 + 5P**

Using these demand and supply functions, answer the following questions.

#### Question 1

Calculate the quantities demanded and supplied for prices from $1 - $15.

#### Question 2

Plot these figures to give the demand and supply curves for the product.

#### Question 3

Using simultaneous equations, calculate the equilibrium price and output.

#### Question 4

If the government imposes a specific tax per unit of $4, plot the new supply curve on the original supply and demand diagram. Use the diagram to find out the new equilibrium price and quantity.

#### Question 5

Calculate the tax revenue received by the government.

#### Question 6

Calculate the revenue received by the firms:

- before the tax
- after the tax

#### Question 7

Calculate consumer expenditure:

- before the tax
- after the tax