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 = 562 + (-2 Q)

Original Supply: P = 13 + 6 Q

An ad valorem tax of 37% is on supply.





























































Answer:

After-tax Demand: P = 562 + (-2 Q)

After-tax Supply: P = 20.634920634921 + 9.5238095238095 Q

Market price: P = 424.75

Market quantity: Q = 68.625

Taxed price: P = 468.04407713499

Taxed quantity: Q = 46.977961432507

Total tax consumer pay: 2033.8674859034

Total tax producer pay: 6101.6024577101

Dead weight loss: DWL = 1874.3771149701