Taxation Practice Problems

This website automatically generates ad valorem problems. There is no limit to how many problems you can try. Press the "Refresh" button on your browser to generate a new problem. Website designed by my student Alex Gan.

Problem:

Original Demand: P = 822 + (-6 Q)

Original Supply: P = 61 + 2 Q

An ad valorem tax of 5% is on supply.





























































Answer:

After-tax Demand: P = 822 + (-6 Q)

After-tax Supply: P = 64.210526315789 + 2.1052631578947 Q

Market price: P = 251.25

Market quantity: Q = 95.125

Taxed price: P = 261.03896103896

Taxed quantity: Q = 93.493506493507

Total tax consumer pay: 915.20429246078

Total tax producer pay: 305.06809748693

Dead weight loss: DWL = 10.647084246922