Question
Asked Feb 26, 2020
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5.25
5.00
4.75
4.50
4.25
4.00
3.75-
3.50
3.25
3.00
2.75
2.50
2.25
2.00
300 320 340 360 380 400
Suppose that a $0.75 tax is imposed in this market. What is the tax incidence?
1/3
1/2
2/3
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5.25 5.00 4.75 4.50 4.25 4.00 3.75- 3.50 3.25 3.00 2.75 2.50 2.25 2.00 300 320 340 360 380 400 Suppose that a $0.75 tax is imposed in this market. What is the tax incidence? 1/3 1/2 2/3

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5.25
5.00
4.75
4.50
4.25
4.00
3.75-
3.50
3.25
3.00
2.75
2.50
2.25
2.00
300
320 340
360 380 400
Suppose that a $0.75 tax is imposed in this market. What is the new equilibrium price that suppliers receive?
4.25
3.50
3.75
4.50
help_outline

Image Transcriptionclose

5.25 5.00 4.75 4.50 4.25 4.00 3.75- 3.50 3.25 3.00 2.75 2.50 2.25 2.00 300 320 340 360 380 400 Suppose that a $0.75 tax is imposed in this market. What is the new equilibrium price that suppliers receive? 4.25 3.50 3.75 4.50

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Expert Answer

Step 1

The imposition of the tax of $0.75 in the market, it will lead to the leftward shift in the demand curve of the economy by $0.75. As the demand curve shifts to the left, the new equilibrium price that the suppliers receive will be obtained at $3.75. Thus, the price that the consumer needs to pay will be higher than the price received by the suppliers whi...

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