Good X: Q D, X = 32 – 2P X – P Y Q S, X = -4 + 2(P X – t X ) where t X is the per unit tax rate on production of X. Good Y:

Good X:

QD, X = 32 – 2*PX – PY

QS, X = -4 + 2*(PX – tX) where tX is the per unit tax rate on production of X.

Good Y:

QD, Y = 46 – 2*PY – 2*PX

QS, Y = -2 + (PY – tY) where tY is the per unit tax rate on production of Y.

Start with a situation of no taxes, so tX = tY = 0.

these goods are compliments

market clearing equation Px=9-0.25Py

market clearing equation Py=16-2/3Px

Px=6

Qx=8

Px=12

Qx=10

what is consumer surplus of X?

Producer surplus of X?

Welfare of X?

COnsumer surplus of Y?

producer Surplus of Y?

welfare of Y?

total welfare for X & Y

Good X: Q D, X = 32 – 2*P X – P Y Q S, X = -4 + 2*(P X – t X ) where t X is the per unit tax rate on production of X. Good Y: