The market demand and supply functions for Easton Redline slow-pitch softball bats are: and Calculate the equilibrium quantity and price and point elasticity of demand in equilibrium. Next, calculate consumer surplus. Suppose the Easton bats are taxed $25 per unit. Calculate the revenues generated by the tax. Calculate the loss in consumer surplus. What percentage of the burden of the tax is paid for by consumers?

First we must determine the market equilibrium quantity and price. To do this, we set quantity demanded equal to quantity supplied and solve for equilibrium price. At a price of $200, the quantity exchanged will be 4. The point elasticity of demand is The choke price (lowest price such that no units are transacted) is $300. The consumer surplus is If the bat market is taxed $25 per unit, the equilibrium price consumers pay is: The quantity exchanged is 3.8. The new level of consumer surplus is: The loss in consumer surplus associated with the tax is $19.50. The tax generates tax revenues of $95. Consumers pay $5 more per unit. Thus, consumers bear 20% of the burden of the tax.