Demand for a vegetable is p = 200 − 3q and supply is p = 40 + 5q (p in Rs. per kg, q in '000 kg). (a) Find the equilibrium. (b) A tax of Rs. 16 per kg is placed on sellers. Find the new equilibrium, the share of the tax paid by buyers and sellers, and the tax revenue.

How to lay out the answer. Follow the frame, then write it in your own words.

1 · Set demand equal to supply. 200 − 3q = 40 + 5q, so 160 = 8q and q = 20; p = 140.
2 · Sketch both lines. [Graph: falling demand line, rising supply line, crossing at (20, 140); new supply line 16 higher]
3 · Shift supply by the tax. New supply: p = 56 + 5q.
4 · New equilibrium. 200 − 3q = 56 + 5q, so q = 18; buyers pay p = 146.
5 · Split the tax. Sellers keep 146 − 16 = 130. Buyers pay Rs. 6 more, sellers get Rs. 10 less.
6 · Tax revenue. 16 × 18,000 kg = Rs. 288,000.
7 · Business link. Traders at Dambulla see exactly this: a tax or cost rise on suppliers lifts market prices and cuts volume.