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# (Solved): Question #3: Taxes [34 Points] Last year, Berkeley, CA passed a tax on yoga classes of \$4 per yoga c ...

Question #3: Taxes [34 Points] Last year, Berkeley, CA passed a tax on yoga classes of \$4 per yoga class. Suppose that the pre-tax demand for yoga classes is QD = 2000 – 100P, and that the pre-tax supply of yoga classes is QS = 300P – 200. (a) Calculate the initial equilibrium price and quantity. [2 Points] (b) Calculate the elasticity of demand (ED) and elasticity of supply (ES) using calculus at the initial equilibrium price and quantity from Part (a). [5 Points] (c) Determine the price that buyers will pay for yoga classes after the tax (PB). Determine the price that firms will receive for yoga classes after the tax (PS). [4 Points] (d) Calculate the deadweight loss (DWL) associated with this tax. [9 Points]

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