Unformatted text preview: 3) The graph below shows the market for good X, initially with equilibrium quantity, Q X * = 22 and equilibrium price, P * = 12. a) Show the effect of a 6 $/unit sales tax, legally collected from the buyers. b) What is the economic incidence of this tax, per unit, on buyers? c) What is the economic incidence of this tax, per unit, on sellers? d) What is the price elasticity of demand between points A and B? e) What is the price elasticity of supply between points B and C? D S P Q X 16 10 12 22 18 B A C Tax Revenue In $ Tax Rate %...
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This note was uploaded on 03/11/2008 for the course EC 201 taught by Professor Brown during the Winter '07 term at Cal Poly Pomona.
- Winter '07