Suppose demand for good X is given by QD = 900- 1/2P where p is the price and QD the quantity demanded. Supply is given by QS = 1/4P. a) Suppose  60 TL tax is imposed on each unit of X that is purchased. What are the equilibrium price and quantity of X after the tax is imposed?   b)  What is the burden of the tax? Explain the key factors that determine the incidence of the tax

Question
  1. Suppose demand for good X is given by QD = 900- 1/2P where p is the price and QD the quantity demanded. Supply is given by QS = 1/4P.

a) Suppose  60 TL tax is imposed on each unit of X that is purchased. What are the equilibrium price and quantity of X after the tax is imposed?

 

b)  What is the burden of the tax? Explain the key factors that determine the incidence of the tax

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Microeconomics

Commodity taxation

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