Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 8, Problem 2MCQ
To determine

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The option that correctly states the situation and the people who will pay the tax levied on sugar.

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Suppose that in Australia the price elasticity of steel demand of -1.5 and the price elasticity of steel supply is 1.2. If a tax of $50 per tonne of steel is applied, then:   a.     The tax burden on consumers will be greater than the tax burden on suppliers. b.     The tax burden on suppliers will be greater than the tax burden on consumers. c.     The tax burden on consumers will be equal to the tax burden on suppliers. d.     The steel price is unlikely to be substantially affected.
1. What is the relationship between total revenue and own-price elasticity of demand? 2. Illustrate a situation when the producer of a good will have a greater tax incidence than a consumer.What does elasticity have to do with tax incidence?
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