Chapter 4: Government Intervention Important Equations

Question	Answer
How to find new supply function when there is a tax? Pre: Qs= c+dP	With tax: Qs=c +d(P-t) Where t= value of tax
How to find consumer surplus	Image: ffe216da-c9d7-44d7-be17-fe3d370aec54 (image/png)
How to find producer surplus	Image: fe159774-1663-49d1-9e62-dbff8898d682 (image/png)
How to calculate welfare loss	Image: b07b2cf3-2f70-4438-8f80-672fed9b9ab7 (image/png)
Identifying tax burden of consumers and producers	Note that consumers is everything above the P* Producers everything below P* - Multiply by Qt Image: 43d8ff4b-da38-43e8-966b-169d282824d1 (image/png)
How to find new supply function when there is a subsidy? Pre: Qs= c +dP	Qs= c + d(P+s) Where s= subsidy value
Calculating shortage: Excess demand Image: 11998c6d-37d5-434f-b033-0b68154b4d7f (image/png)	Shortage = Qd-Qs
Calculating surplus: Excess supply Image: 6921ce07-b66d-412b-a7d9-99a4f727f514 (image/png)	Surplus = Qs- Qd

Resource summary

	Created by Jasmine Wells about 9 years ago