The demand and supply functions for three goods are given as follows:

Dx=100-3Px+Py+3Pz
Dy=80 +Px-2Py-2Pz
Dz=120+3Px-Py-4Pz
Sx=-10+Px
Sy=-20=3Py
Sz=-3+2Pz
Q1: Determine the equilibrium prices and quantities of all three goods.
• The government decides to:
a. Impose a 25% tax on X
b. Impose a 5Rs unit Tax on Y
c. Gives a 10% subsidy on good Z
• Analyze the impact of each of these three policies separately on equilibrium prices and Quantities.
• Also calculate changes in consumer and producer surpluses and the amount of revenue earned by the government.
Q2: Repeat this exercise when polices (a, b),(b,c) & (a, b,c) are jointly implemented. Which policy choice is best? Why?
Q: 3 Provide theoretical justification (using diagrams) of all results obtained.

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