Suppose the equilibrium for the market of staplers has a price of $ 45 , at which 204.4 staplers are sold. The Government believes staplers are undervalued and imposes a price floor of $ 49.6 under which only 145.8 staplers are transacted, generating a deadweight loss of $ 119.1 . What size tax would mimic the effect that the price floor has on consumers?

Suppose the equilibrium for the market of staplers has a price of $ 45 , at which 204.4 staplers are sold. The Government believes staplers are undervalued and imposes a price floor of $ 49.6 under which only 145.8 staplers are transacted, generating a deadweight loss of $ 119.1 . What size tax would mimic the effect that the price floor has on consumers?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter5: Elasticity Of Demand And Supply

Section5.A: Appendix: Price Elasticity And Tax Incidence

Problem 1AQ

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