The demand for a good is XD=1500 - 5P and the supply is XS= 1000 where X is number of units and P is price per unit. In equilibrium without taxes, the price is 100 and the quantity of X that is traded is 1000. A) Find the incidence of a $100 sales tax imposed by law on the demander. Be sure to explain what is meant by incidence and how are you measuring it. B) How would your answer differ if the law said the supplier had to pay the tax? Explain or justify your answer C) What sales tax rate imposed on the demander will produce the same outcome as this per unit rate

The demand for a good is XD=1500 - 5P and the supply is XS= 1000 where X is number of units and P is price per unit. In equilibrium without taxes, the price is 100 and the quantity of X that is traded is 1000. A) Find the incidence of a $100 sales tax imposed by law on the demander. Be sure to explain what is meant by incidence and how are you measuring it. B) How would your answer differ if the law said the supplier had to pay the tax? Explain or justify your answer C) What sales tax rate imposed on the demander will produce the same outcome as this per unit rate

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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