The demand for tomatoes is Q = 40-4P and the supply of tomatoes is Q = P +10. Answer the following questions. %3D (a) Suppose that $1 per unit tax is levied on the consumers. Who bears the economiC incidence of this tax? (b) Calculate the deadweight loss (c) Suppose that stores will pay $1 per unit tax directly. What will happen to the "sticker price" on tomatoes? How will the size of the consumer tax burden change?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The demand for tomatoes is Q = 40-4P and the supply of tomatoes is Q = P +10.
Answer the following questions.
(a) Suppose that $1 per unit tax is levied on the consumers. Who bears the economic
incidence of this tax?
(b) Calculate the deadweight loss
(c) Suppose that stores will pay $1 per unit tax directly. What will happen to the "sticker
price" on tomatoes? How will the size of the consumer tax burden change?
(d) Suppose that tax is increased to $2 per unit on the consumers. Calculate the
deadweight loss. Compare the size of the deadweight loss with (b).
Transcribed Image Text:The demand for tomatoes is Q = 40-4P and the supply of tomatoes is Q = P +10. Answer the following questions. (a) Suppose that $1 per unit tax is levied on the consumers. Who bears the economic incidence of this tax? (b) Calculate the deadweight loss (c) Suppose that stores will pay $1 per unit tax directly. What will happen to the "sticker price" on tomatoes? How will the size of the consumer tax burden change? (d) Suppose that tax is increased to $2 per unit on the consumers. Calculate the deadweight loss. Compare the size of the deadweight loss with (b).
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