The demand and supply functions of a good are given by:
P= - 1/4Qd+6.75
P = 1/2Qs + 2
I have to find the quilibrium quantity of the government imposese a fixed tax of £ 2 on each good. I know that the tax affects the supply side which is Qs.
firstly i have to get the Qs andQd one the left side on its own.
So i got for the first step:
1/4 Qd = - p + 48
1/2 Qs = p - 2
But i don't know how to move the 1/2 and 1/4 to the other side.
4(1/4 Qd) = 4(- p + 48)
2(1/2 Qs) = 2(p - 2)
Let's see what you get.