The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. (10') Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.
The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. (10') Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 10PA
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