Please help with the following question Market AMarket BP(dollars)P (dollars)Q (units)Q (units)5,0005,000Consider two markets identical in every respect, except the price elasticity ofdemand. Market A has an inelastic demand and Market B has an elastic demand. Ifthe government places a tax of $0.50/unit in each market, in which market will theproducer tax incidence be larger?Market AMarket BNot enough information

ANS Tax incidence will be larger if the change in quantity demanded due to the tax is greater. PED…

Market A Market B P(dollars) P (dollars) Q (units) Q (units) 5,000 5,000 Consider two markets identical in every respect, except the price elasticity of demand. Market A has an inelastic demand Market an elastic demand. the government places a tax of $0.50/unit in each market, in which market will the producer tax incidence be larger? O Market A Market B Not enough information

Market A Market B P(dollars) P (dollars) Q (units) Q (units) 5,000 5,000 Consider two markets identical in every respect, except the price elasticity of demand. Market A has an inelastic demand Market an elastic demand. the government places a tax of $0.50/unit in each market, in which market will the producer tax incidence be larger? O Market A Market B Not enough information

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 25CTQ: Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while...

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