Quantitative Analysis of Taxes

6. Introduction to Taxes and Subsidies / Quantitative Analysis of Taxes / Problem 3

Problem 3

If the demand equation is Qd = 20 - 3P and a \$1 tax is imposed on consumers, how would you adjust this equation?

Qd = 20 - 3P - 1

Qd = 20 - 3(P + 1)

Qd = 20 - 3P + 1

Qd = 20 - 3(P - 1)