question archive Among the tax proposals regularly considered by Congress is an additional tax on distilled liquors
Among the tax proposals regularly considered by Congress is an additional tax on distilled liquors
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Among the tax proposals regularly considered by Congress is an additional tax on distilled liquors. The would not apply to beer. The own-price elasticity of supply of liquor is 4.0 and the own-price elasticity of demand is -0.2. The cross price elasticity of demand for beer with respect to the price of liquor is 0.1. a. If the new tax is imposed, who will bear the greater burden, liquor suppliers or consumers? Explain. b. How will the new tax affect the beer market?
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