The demand for gasoline is P= 4-0.002Q and the supply is P= 0.4 + 0.004Q, where Pis in dollars and Qis in gallons. Instructions: Round your answer to the nearest penny (2 decimal places). If a tax of $0.8/gallon is placed on petrol, what is the incidence of the tax? Tax incidence to the consumer: $ Tax incidence to the supplier:

The demand for gasoline is P= 4-0.002Q and the supply is P= 0.4 + 0.004Q, where Pis in dollars and Qis in gallons. Instructions: Round your answer to the nearest penny (2 decimal places). If a tax of $0.8/gallon is placed on petrol, what is the incidence of the tax? Tax incidence to the consumer: $ Tax incidence to the supplier:

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 16P

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In a market where the supply curve is perfectly inelastic how does an excise tax affect the price paid by consumers and the quantity bought and sold?
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