In Figure 3.7, applying a $1.05 specific tax causes the equilibrium price to rise by 70¢ and the equilibrium quantity to fall by 14 million kg of pork per year. Using the pork supply function and the original and after-tax demand functions, derive these results using algebra. Figure 3.7

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
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Chapter6: Demand And Elasticity
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In Figure 3.7, applying a $1.05 specific tax causes the equilibrium price to rise by 70¢ and the equilibrium quantity to fall by 14 million kg of pork per year. Using the pork supply function and the original and after-tax demand functions, derive these results using algebra.

Figure 3.7

 

 

 

 

 

 

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