With the use of diagrams and by including consumer and producer surplus in your answer, explain fully how the price elasticity of demand for a product influences the incidence of an indirect tax on that product.

Suppose that the supply of oil is elastic and demand for oil is inelastic. If the government taxes oil, who will bear most of the tax burden?

Consider a market where supply and demand curves are given by Q = 4P and Q = 12 - 2P. Calculate the equilibrium price and quantity in this market. Now consider a government that collects a unit tax of 0.2 liras for every unit of good sold in the market from the producers. What is the new supply curve? What is the new market equilibrium quantity? What is the price that consumers pay? What is the price producers get? What is the tax incidence on consumers? producers?

Given the following information QD = 240 - 5P QS = p where QD is the quantity demand, QS is the quantity supplied and P is the price. Suppose that the government decides to impose a tax $12 per unit on sellers in this market. Determine:   g) Tax revenue h) Deadweight loss of the tax i) Total surplus after tax