Suppose that the government levies a sales tax on suppliers of good X with a perfectly inelastic demand curve. Analyze the short run effects (before tax and after tax) of this tax on the following: a) Price paid by consumer after tax b) Price received by supplier after tax c) Tax revenue d) Deadweight loss e) consumers’ tax share f) producers’ tax share

Suppose that the government levies a sales tax on suppliers of good X with a perfectly inelastic demand curve. Analyze the short run effects (before tax and after tax) of this tax on the following: a) Price paid by consumer after tax b) Price received by supplier after tax c) Tax revenue d) Deadweight loss e) consumers’ tax share f) producers’ tax share

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 2SQP

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