Refer to Figure 18-3. Suppose that supply is perfectly elastic and the price of this good is initially in equilibrium at P₁. If an excise tax raises the price from P₁ to P4, the excess burden of the tax is A. the area P, CP4- OB. the area P₁ Cq₁0. OC. the area P3AP4- OD. the area BFC. O E. impossible to calculate from the given information. PA P3 $ P2 P₁ 0 FIGURE 18-3 mo A B F: 92 Quantity C 9₁ image 1 Demand
Refer to Figure 18-3. Suppose that supply is perfectly elastic and the price of this good is initially in equilibrium at P₁. If an excise tax raises the price from P₁ to P4, the excess burden of the tax is A. the area P, CP4- OB. the area P₁ Cq₁0. OC. the area P3AP4- OD. the area BFC. O E. impossible to calculate from the given information. PA P3 $ P2 P₁ 0 FIGURE 18-3 mo A B F: 92 Quantity C 9₁ image 1 Demand
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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