Question 1: Very Basic Supply & Demand This question revisits the lumber market theme from the Discussion Questipns 2. Suppose a friend of yours tells you that in his home country (which we can call Country 1), the market for lumber is well described by the following supply and demand equations (slightly modified from the earlier question): D: QD = 12 - P S: Qs P-2 Note that these equations can be rearranged as follows (sometimes called the "inverse demand" and "inverse supply" equations): D: PD = 12 - Q S: Ps=2+Q A) Find the equilibrium price and quantity of lumber. B) If the government imposed a tax of $2 per unit, how large would the DWL be? C) If the government imposed a tax of $4 per unit, how large would the DWL be?

Question 1: Very Basic Supply & Demand This question revisits the lumber market theme from the Discussion Questipns 2. Suppose a friend of yours tells you that in his home country (which we can call Country 1), the market for lumber is well described by the following supply and demand equations (slightly modified from the earlier question): D: QD = 12 - P S: Qs P-2 Note that these equations can be rearranged as follows (sometimes called the "inverse demand" and "inverse supply" equations): D: PD = 12 - Q S: Ps=2+Q A) Find the equilibrium price and quantity of lumber. B) If the government imposed a tax of $2 per unit, how large would the DWL be? C) If the government imposed a tax of $4 per unit, how large would the DWL be?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 10PA

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