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Suppose that the supply of bourbon (unit = 1 bottle) is given by P = 3Q....

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Economics

Suppose that the supply of bourbon (unit = 1 bottle) is given byP = 3Q. The demand for

bourbon is given by P = 100 – Q. Suppose the governmentintroduces a tax on bourbon of $12 per

bottle, to be paid to the government by consumers.

a. What is the deadweight loss associated with this $12 tax oneach bottle of bourbon?

b. How much of the deadweight loss is borne by consumers? Howmuch is borne by suppliers?

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