Assume that in a market where the supply and demand curves are equally elastic, initially the pre-tax equilibrium price is $20/unit. Then, suppose the government imposes a $12/unit consumer tax. What is the new (total) price that consumers pay? What is the new (total) price that producers receive? Consumers pay $26/unit and producers receives $14/unit. Consumers pay $20/unit and producers receives $14/unit. Consumers pay $32/unit and producers receives $8/unit. O Consumers pay $14/unit and producers receives $26/unit.

Assume that in a market where the supply and demand curves are equally elastic, initially the pre-tax equilibrium price is $20/unit. Then, suppose the government imposes a $12/unit consumer tax. What is the new (total) price that consumers pay? What is the new (total) price that producers receive? Consumers pay $26/unit and producers receives $14/unit. Consumers pay $20/unit and producers receives $14/unit. Consumers pay $32/unit and producers receives $8/unit. O Consumers pay $14/unit and producers receives $26/unit.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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