071207 - Tax is vertical displacement between the S curve...

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Sheet1 Page 1 071207 | ------- Price Ceilings Gains: Demanders who can buy at the lower price Losers: Demanders who cannot buy at the lower price. All suppliers. Price Floors Gains: Suppliers that sell at the higher prices. Losers: Suppliers who cannot sell at the higher price. Tax Incidence: Division of who pays the tax between the demanders and suppliers.
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Unformatted text preview: Tax is vertical displacement between the S curve and S + Tax curve. Tax relation with elasticity: In a high elasticity environment consumers pay a small amount, suppliers pay a large amount. Vice versa in low elasticity....
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This note was uploaded on 04/13/2008 for the course ECO 2023 taught by Professor Rush during the Summer '08 term at University of Florida.

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