Consider the market for gasoline. For each of the following, explain what happens to the demand and/or supply of gasoline and the price and quantity exchanged of gasoline. 1. The government imposes a

a. Sellers will receive a price of P = $540 after the tax is levied. To find this answer, we need to first determine the new demand and supply equations after the tax is levied. The demand equation becomes Q = 1800 - 3(P + 80) = 1680 - 3P, since the tax is added to the consumer's price. The supply equation stays the same, Q = -200 + 2P. To find the equilibrium price, we set the new demand and supply equations equal to each other: 1680 - 3P = -200 + 2P Solving for P: 5P = 1880 P = $376 However, this is the price before the tax is levied. To find the price sellers will receive (after the tax), we subtract the per-unit tax from the equilibrium price: $376 - $80 = $296 And then add this price to the supply equation to find the quantity sold: Q = -200 + 2($296) Q = -200 + $592 Q = 392 Therefore, sellers will receive a price of $540 ($296 + $80 + $164 to cover the tax) for each laptop sold. b. Consumers will pay a price of P = $620 after the tax is levied. This is the consumer's price, which includes the added excise tax of $80. c. Consumers will pay 100% of the excise tax. This is because the demand for laptops is relatively inelastic, meaning that consumers are willing to pay a high price for laptops even after the tax is added. d. Suppliers will pay 0% of the tax. This is because the tax is levied on consumers only, so the suppliers do not bear any of the tax burden.