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*