Assume that the demand function is given by x = p-εd and the supply function by y = . Find the equilibrium price. What is the effect on the equilibrium price of the introduction of a tax t = 1/10 if εd = εs = ½ ? Describe how the incidence of the tax is divided between consumers and suppliers.
Assume that the demand function is given by x = p-εd and the supply function by y = . Find the equilibrium price. What is the effect on the equilibrium price of the introduction of a tax t = 1/10 if εd = εs = ½ ? Describe how the incidence of the tax is divided between consumers and suppliers.
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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Assume that the demand function is given by x = p-εd and the supply function by y = . Find the
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