The annual demand for liquor in a certain state is given by the following equation: Qp=500.000-20.00OP where Pis the price per gallon and QD is the quantity of gallons demanded per year. The supply of liquor is given by the equation Qs=30.000P. Now assume that a unit tax of 1$ is levied on the sellers of the commodity (i.e. statutory incidence is on the producers).

The annual demand for liquor in a certain state is given by the following equation: Qp=500.000-20.00OP where Pis the price per gallon and QD is the quantity of gallons demanded per year. The supply of liquor is given by the equation Qs=30.000P. Now assume that a unit tax of 1$ is levied on the sellers of the commodity (i.e. statutory incidence is on the producers).

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter17: Taxation And Resource Allocation

Section: Chapter Questions

Problem 4TY

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