Suppose that the demand curve for accountants isE D =20-W. The supply curve isE

Question

Suppose that the demand curve for accountants isED=20-W. The supply curve isES=2+2W.

a. Graph the demand and supply curves. What is the equilibrium wage and number of accountants hired?

b. Suppose California taxes accountants $2. What is the effect on the equilibrium wage and number of accountants hired?

c. Draw the effeect of the tax on the market for accountant in the graph to part a).

d. How much does the accountant receive? How much does the accounting firm pay? How much does the State receive as tax revenue?

Explanation / Answer

to Graph the demand and supply curves. take ed on x axis and w on the y axis . at equilibrium ed= es 20-W.=2+2W. equating this you get value of equilibrium wage and equibrium quantity

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