ib-economics-quantitative

ii.iii.Calculate the new supply function, after the tax, draw it on the diagram and indicatethe new equilibrium price and quantity.Calculate the change in consumer expenditure.iv.Calculate the change in producer revenue.v. Calculate the government tax revenue.vi.Calculate the loss of consumer surplus.vii.Calculate the loss of producer surplus.Calculate the effects of the imposition of a specific tax on the market (on price,quantity, consumer expenditure, producer revenue, government revenue, consumersurplus and producer surplus).Step 1Calculate the original equilibrium price and quantity from the demand and supply functions.E.g.If the demand and supply functions for a product are Q D = 2000 – 200P andQ S = -400 + 400P. Then equilibrium can be calculated by setting the equationsagainst each other, so that:Q D = Q S ,2000 – 200P = -400 + 400P2400 = 600PP = $4Produced by Ian Dorton & Jocelyn Blink Page 19