(a) The supply and demand equations for a good are p-2q = 1 and p+ 2q = 9, respectively. Find the equilibrium price and quantity. A percentage [of the price] tax of 100r% is imposed. Find the new equilibrium price and quantity. What fraction of the tax paid has been passed onto the consumer? (b) If an asset is purchased at some initial time t = 0 for $200 and sold at some time t > 0 in the future, the value of the sale is given by P(t)=(2²+ 14t+200)e-t/10, dollars. Find the stationary points of P(t) and determine their nature. Should the asset be purchased and, if so, when is the best time to sell it? [Hint: The fact that e> 2.7 may be useful.]

(a) The supply and demand equations for a good are p-2q = 1 and p+ 2q = 9, respectively. Find the equilibrium price and quantity. A percentage [of the price] tax of 100r% is imposed. Find the new equilibrium price and quantity. What fraction of the tax paid has been passed onto the consumer? (b) If an asset is purchased at some initial time t = 0 for $200 and sold at some time t > 0 in the future, the value of the sale is given by P(t)=(2²+ 14t+200)e-t/10, dollars. Find the stationary points of P(t) and determine their nature. Should the asset be purchased and, if so, when is the best time to sell it? [Hint: The fact that e> 2.7 may be useful.]

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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