Suppose the government imposes a per-unit tax on the sellers of potato chips, shifting the supply curve upwards from S1 to S2, as shown in the following figure Price (per box) 35 26 201 I 200 300 S₂ S₁ D Quantity (boxes) a. How does the per-unit tax affect the quantity transacted, the price paid by buyers and the price received by sellers? b. Calculate the government tax revenue. Do the buyers or the sellers bear a larger tax burden?

Suppose the government imposes a per-unit tax on the sellers of potato chips, shifting the supply curve upwards from S1 to S2, as shown in the following figure Price (per box) 35 26 201 I 200 300 S₂ S₁ D Quantity (boxes) a. How does the per-unit tax affect the quantity transacted, the price paid by buyers and the price received by sellers? b. Calculate the government tax revenue. Do the buyers or the sellers bear a larger tax burden?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 30CTQ: In a market where the supply curve is perfectly inelastic how does an excise tax affect the price...

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