<p>For (a) it appears that you made a slight miscalculation; the equilibrium price cannot be $100 since in that case <strong>Quantity Demanded</strong> = -1500.</p>

<p>For (a) the equilibrium price is $10 and Quantity of 300.</p>

<p>The trick to getting (b) is seeing the viewpoint of the producers and the buyers rather than just applying the maths.</p>

<p>Producers: 30P where P is the price per litre that they <strong>actually</strong> receive.<br> 
Buyers:  500 - 20P where P is the amount that they <strong>actually</strong> pay.</p>

<p>Since producers now pay an extra $1 per litre in tax, their <strong>actual</strong> price is one dollar less therefore <br>Producers with tax is now <strong>30(P-1)</strong>.</p>

<p>If you work out the equlibrium using the same method as in (a), you will get a price equilibrium of $10.6 with a quantity of 288.</p>

CC BY-SA 3.0
2016-07-19T12:41:48.240Z
2016-07-19T12:41:48.240Z
Yuvan
<p>Can help me with part b of this problem?</p>

<p>The demand for wine is given by the equation $QD = 500 – 20P$, where $P$ is the price of wine per litre and $QD$ is the quantity of wine demanded in litres. The supply of wine is given by the equation $QS = 30P$.</p>

<p><strong>a) Solve for the equilibrium quantity and price of wine.</strong></p>

<p>The current equilibrium would be $500 - 20P = 30P$.  therefore the equilibrium price is $P=$ $100 and equilibrium quantity is 1500. </p>

<p><strong>b) Suppose that a $1 per litre tax is levied on the wine producers. Calculate the new equilibrium quantity and price of wine after tax.</strong></p>

<p>Is the new supply $QS = 30P + 1$? 
So the new equilibrium can be obtain from $30P+1 = 500-20P$.  But I get decimal places?  Or is the equilibrium $30P + 1Q$?</p>

CC BY-SA 3.0
2016-07-20T07:56:57.790Z
I edited some Latex form, but you should check your maths for the a).
clem steredenn
<microeconomics><self-study>
Market Equilibrium
Joscelyn
# Market Equilibrium

(Asked by: username_0 on 2016-07-19)

Can help me with part b of this problem?

The demand for wine is given by the equation $QD = 500 – 20P$, where $P$ is the price of wine per litre and $QD$ is the quantity of wine demanded in litres. The supply of wine is given by the equation $QS = 30P$.

**a) Solve for the equilibrium quantity and price of wine.**

The current equilibrium would be $500 - 20P = 30P$. therefore the equilibrium price is $P=$ $100 and equilibrium quantity is 1500.

**b) Suppose that a $1 per litre tax is levied on the wine producers. Calculate the new equilibrium quantity and price of wine after tax.**

Is the new supply $QS = 30P + 1$?
So the new equilibrium can be obtain from $30P+1 = 500-20P$. But I get decimal places? Or is the equilibrium $30P + 1Q$?

**Tags:** microeconomics, self-study

> **Comments:**
> **username_1**: I edited some Latex form, but you should check your maths for the a).  

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## 1 answers

### Answer by username_2 on 2016-07-19. Score: 3

For (a) it appears that you made a slight miscalculation; the equilibrium price cannot be $100 since in that case **Quantity Demanded** = -1500.

For (a) the equilibrium price is $10 and Quantity of 300.

The trick to getting (b) is seeing the viewpoint of the producers and the buyers rather than just applying the maths.

Producers: 30P where P is the price per litre that they **actually** receive.  
Buyers: 500 - 20P where P is the amount that they **actually** pay.

Since producers now pay an extra $1 per litre in tax, their **actual** price is one dollar less therefore   
Producers with tax is now **30(P-1)**.

If you work out the equlibrium using the same method as in (a), you will get a price equilibrium of $10.6 with a quantity of 288.


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