Microeconomics
Microeconomics
5th Edition
ISBN: 9781319098780
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Question
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Chapter 7, Problem 9P
To determine

  1. Whether the consumer or the producer bear more burden of this tax by the help of a diagram
  2. Whether the tax is on benefits principle or ability to pay principle

Concept Introduction:

Consumer Surplus:

It is the difference between what the consumer is willing to pay and what he actually pays.

Producer Surplus:

It is the difference between the amount a producer of a good gets and the minimum amount that he is willing to accept for the good.

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