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2008-12-20

Suppose that a market is described by the following supply and demand squations:

Qs= -1+(1/5)P   Qd=5-(1/2)P

and suppose that a tax of ¥6 is placed on buyers,search for new equilibrium and explain this kind of economic phenomene.

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2008-12-21 17:50:00
no tax situation:

solve({q=-1+(1/5)*p,  q=5-(1/2)*p},{q,p})

{p = 60/7, q = 5/7}

with tax situation:

solve({q=-1+(1/5)*p,  q=5-(1/2)*(p+5)},{q,p});

{q = 0, p = 5}

the market is destroyed by the tax.


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