Perfect Competition Demand and Supply

AmeliaG · #1 Dec 2, 2006, 08:19 AM

I have an assignment due and I was just hoping that maybe someboyd could confirm with me my answers . . . The question is:
Demand in a perfectly cometitive market is P=100Q. Supply in that market is P=10+Q. What is the market equilibrium and quantity? Given the price and quantity, what is hte consumer surplus, prodcuder surplus and dead-weight loss? If government imposes a $10 per unit sales tax, what is the new equilibrium price and quantity? How much is consumer surplus, producer surplus an dead-weight loss? Thanks you for your help.

ordinaryguy · Dec 2, 2006, 08:56 AM

The demand function P=100Q is a positive sloping line that passes ttrough the origin. This is a mighty strange demand function, since it says that the higher the price, the greater the quantity demanded. Is this a trick question?



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