Answer:
The correct solution will be "$3.25; $2.25". The further explanation is given below.
Explanation:
The $1 tax could very well start creating a wedge between some of the price that producers and consumers start receiving.
⇒ [tex]Pd-Ps=1: 10[/tex]
to
⇒ [tex]0.15Q-0.05Q=1[/tex]
Attempting to solve the Q, we should get Q=45 equilibrium.
The market value that customers pay will be:
= [tex]10-0.15\times 45[/tex]
= [tex]3.25[/tex] ($)
The cost that customers receive will be:
= [tex]0.05\times 45[/tex]
= [tex]2.25[/tex] ($)
