ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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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.
expand button
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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