Question: Suppose that demand for oranges is given by the following equations:

Q= -200 P + 1,000

With quantity (Q) measured in oranges per day and price (P) measured in dollars per orange. The supply curve is given by:

Q= 800 P

1. Compute the equilibrium price and quantity of oranges.
2. Suppose that an excise tax of .50 cents a piece is imposed on oranges. What are the new supply and demand curve? What is the new equilibrium price and quantity of oranges? What is the new post-tax price from the supplier’s point of view? Illustrate your answer by drawing the supply and demand curves.
3. Repeat the exercise for .50 cents sales tax instead of excise tax.
4. Suppose that an excise of .20 cents a piece and a sale tax of .30 cents are imposed simultaneously, answer again all the questions in part (B).

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