The government has increased VAT on some commodities in order to raise revenue. The market for commodity X was at equilibrim before tax at price Ksh. 50 per unit sold and the quantity was 5000 units. Suppose own price elasticity of demand is 0.6 and the elasticity of supply is 1.1 After the government announced tax measures the new market price increased to Ksh. 70 per unit. Calculate the equilibrium price and quantities before tax. Calculate the seller and buyers burden, Explain
The government has increased VAT on some commodities in order to raise revenue. The market for commodity X was at equilibrim before tax at price Ksh. 50 per unit sold and the quantity was 5000 units. Suppose own price elasticity of demand is 0.6 and the elasticity of supply is 1.1 After the government announced tax measures the new market price increased to Ksh. 70 per unit. Calculate the equilibrium price and quantities before tax. Calculate the seller and buyers burden, Explain
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 7SQ
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The government has increased VAT on some commodities in order to raise revenue. The market for commodity X was at equilibrim before tax at
- Calculate the
equilibrium price and quantities before tax. - Calculate the seller and buyers burden, Explain
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