Suppose the government applies a specific tax to a good where the demand elasticity is -0.8, and the supply elasticity is 1.4. If a specific tax of $3.25 was placed on the good, to the parest cent, what is the price increase that consumers would pay? What is the tax incidence? I

Suppose the government applies a specific tax to a good where the demand elasticity is -0.8, and the supply elasticity is 1.4. If a specific tax of $3.25 was placed on the good, to the parest cent, what is the price increase that consumers would pay? What is the tax incidence? I

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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Question

Suppose the government applies a specific tax to a good where the demand elasticity is -0.8,
and the supply elasticity is 1.4. If a specific tax of $3.25 was placed on the good, to the arest
cent, what is the price increase that consumers would pay? What is the tax incidence? I

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