These next five problems consider tax incidence. Suppose the market supply and demand for guitars in Happy Valley are given by: Demand: P = 300 -...

These next five problems consider tax incidence. Suppose the market supply and demand for guitars in Happy Valley are given by:

Demand: P = 300 - (1/2)Q

Supply: P = 100 + (1/3)Q

What is the equilibrium price and quantity of the product?

A - P* = 120, Q* = 1200

B - P* = 180, Q* = 240

C - P* = 60, Q* = 480

D - P* = 225, Q* = 150

E - none of the above

What is the price elasticity of demand at the equilibrium price?

A - Elasticity = -1

B - Elasticity = -2

C - Elasticity = -0.5

D - Elasticity = -0.666

E - none of the above

For the next three questions, assume there is $20 per unit tax levied on the consumers of guitars. What price will buyers pay after the tax is imposed?

A - $192

B - $200

C - $160

D - $190

E - none of the above

What is the quantity of the good that will be sold after the tax is imposed?

A - 196

B - 210

C - 224

D - 216

E - none of the above

What is the deadweight loss created by the tax?

A - DWL = $360

B - DWL = $120

C - DWL = $240

D - DWL = $480

E - none of the above