Suppose the government removes a tax on buyers of a good and levies a tax of the same size on sellers of the good. How does this change in tax policy affect the price that buyers pay sellers for this good, the amount buyers are out of pocket including the tax, the amount sellers receive net of tax, and the quantity of the good sold?
Suppose the government removes a tax on buyers of a good and levies a tax of the same size on sellers of the good. How does this change in tax policy affect the price that buyers pay sellers for this good, the amount buyers are out of pocket including the tax, the amount sellers receive net of tax, and the quantity of the good sold?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose the government removes a tax on buyers of a good and levies a tax of
the same size on sellers of the good. How does this change in tax policy affect
the price that buyers pay sellers for this good, the amount buyers are out of
pocket including the tax, the amount sellers receive net of tax, and the quantity
of the good sold?
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