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.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 25SQ
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