## The following table provides information on the demand for cars:

Question
 Price (Euro ‘000s) Demand (Units ‘000/year) Supply (Units ‘000/year) 0 48 0 2 42 6 4 36 12 6 30 18 8 24 24 10 18 30 12 12 36 14 6 42 16 0 48

a) Draw the demand and supply curve based on the above figures and determine the equilibrium price and quantity.

b) Assume that the demand and supply curves for cars are elastic. If the government imposed a tax of Euro X on the buyer of each car, what would happen to the equilibrium price?

c) Assume that the government imposes a tax of Euro 3,000 (prices in table are expressed in thousands, so the tax is of Euro 3). What is the impact on the equilibrium price and quantity?

d) Based on the same tax in (c), what is the price if:

i) the buyers pay after the tax is imposed?

ii) the sellers receive after the tax is imposed?

e) Based on your demand and supply curve, what is the amount of tax that:

i) buyers would want to pay?

ii) suppliers would want to pay?

f) Is a tax on the buyers of cars likely to increase or reduce the size of the car market? Why?