Suppose the market supply and demand for guitars in Happy Valley are given by:
Supply: P = 120 + Q
Demand: P = 600 — 4Q.
Calculate the equilibrium price and quantity of guitars.
For the remaining questions, suppose a tax of $20 per guitar is levied on the consumers.
How much will the consumers pay for guitars after the tax?
How much will producers receive for guitars after the tax?
What proportion of the tax will be paid by the producers?
What quantity of the good will be bought/sold after the tax?
What is the deadweight loss created by the tax?