ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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**Question 3:**

Suppose that the government was taxing consumers of widgets by $3 per unit. Now it repeals the tax on consumers and replaces it with a $3 per unit tax on producers. What will happen to the price of widgets?

a. The price will rise by $3

b. The price will rise, but by less than $3

c. The price will be unchanged

d. The price will fall, but by less than $3

e. The price will fall by $3
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Transcribed Image Text:**Question 3:** Suppose that the government was taxing consumers of widgets by $3 per unit. Now it repeals the tax on consumers and replaces it with a $3 per unit tax on producers. What will happen to the price of widgets? a. The price will rise by $3 b. The price will rise, but by less than $3 c. The price will be unchanged d. The price will fall, but by less than $3 e. The price will fall by $3
Expert Solution
Check Mark
Step 1

The tax effect on the market does not change depending on whom the tax is levied.

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