Notice that the before-tax equilibrium price was 25. Compared to the price, in the after-tax equilibrium, how much more would consumers need to pay to buy one X? This is the consumers’ tax incidence. Also, in the after-tax equilibrium, how much less would sellers receive from each X they sell? This is the sellers’ tax incidence. (note: this question asks changes in the prices from before-tax equilibrium price 25) Consumers’ tax incidence: Sellers’ tax incidence:
Notice that the before-tax equilibrium price was 25. Compared to the price, in the after-tax equilibrium, how much more would consumers need to pay to buy one X? This is the consumers’ tax incidence. Also, in the after-tax equilibrium, how much less would sellers receive from each X they sell? This is the sellers’ tax incidence. (note: this question asks changes in the prices from before-tax equilibrium price 25) Consumers’ tax incidence: Sellers’ tax incidence:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Notice that the before-tax equilibrium price was 25. Compared to the price, in the after-tax equilibrium, how much more would consumers need to pay to buy one X? This is the consumers’ tax incidence.
Also, in the after-tax equilibrium, how much less would sellers receive from each X they sell? This is the sellers’ tax
incidence.
(note: this question asks changes in the prices from before-tax equilibrium price 25)
Consumers’ tax incidence:
Sellers’ tax incidence:
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