Use the information on case 1 in Table 10-2 to
Answer the following questions.
1. Suppose that the government confiscated
two CDs per week as being “not suitable for
young ears.” What would be the equilibrium
price of the remaining CDs?
2. Suppose that the government imposed a $4-
per-CD tax, resulting in a $4 difference between
what consumers pay and what firms receive for
each CD. How many CDs would be sold? What price would buyers pay?