The market demand for rose is QD = 2400–60P and the market supply for rose is QS= –600 +40P. Government imposes a $5 tax per unit of rose sold by the producer. a) Who bears the economic incidence of this tax? b) Why does one side take more burden of tax than the other side?

The market demand for rose is QD = 2400–60P and the market supply for rose is QS= –600 +40P. Government imposes a $5 tax per unit of rose sold by the producer. a) Who bears the economic incidence of this tax? b) Why does one side take more burden of tax than the other side?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

ChapterP2: Microeconomics Fundamentals

Section: Chapter Questions

Problem 10KC

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Question

The market demand for rose is QD = 2400–60P and the market supply for rose is QS= –600 +40P. Government imposes a $5 tax per unit of rose sold by the producer.
a) Who bears the economic incidence of this tax?
b) Why does one side take more burden of tax than the other side?

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