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QUESTION
Q = 50 - 2P S: Q = 5 + 2P t= .
D: Q = 50 - 2P
S: Q = 5 + 2P
t= .25 or 25 %
Impose an ad valorem tax
a) solve for the original market clearing price P* and quantity Q*
b) calculate price elasticity of demand at the initial price, P*
c) calculate the price elasticity of supply at the initial price, P*
