question archive Suppose the government applies a specific tax to a good, where the demand elasticity, epsilon, is -1
Suppose the government applies a specific tax to a good, where the demand elasticity, epsilon, is -1
Subject:EconomicsPrice:2.88 Bought3
Suppose the government applies a specific tax to a good, where the demand elasticity, epsilon, is -1.7, and the supply elasticity, eta, is 0.7. If a specific tax, tau, of $3.25 was placed on the good, to the nearest cent, what is the price increase that consumers would pay? To the nearest cent, what is the price decrease that producers would pay? What is the tax incidence on consumers?
