1) If there is typical supply and demand and the government implements a per unit tax on the business: Who pays for the tax (Producers, consumers, or both?) What happens to the supply curve?
1) If there is typical supply and demand and the government implements a per unit tax on the business: Who pays for the tax (Producers, consumers, or both?) What happens to the supply curve?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Supply & Demand with a Tax Questions
1) If there is typical supply and demand and the
government implements a per unit tax on the business:
Who pays for the tax (Producers, consumers, or both?)
What happens to the supply curve?
2) If demand is more inelastic, then who pays for most of
the tax?
3) Draw the following graph: Supply and demand
determines a PE of $100 and an EQ of 300. The
government then implements a $6 per unit tax. Show the
impact this has on the supply curve.
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