ECON 101 2Midtermreview

a change in the price of one good changes the demand

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Unformatted text preview: Supply decreases and the curve S + tax on sellers shows the new supply curve. Ø། The market price paid by buyers rises to $4.00 a pack and the quantity bought decreases. Ø། The price received by the sellers falls to $2.50 a pack. So with the tax of $1.50 a pack, buyers pay $1.00 a pack more and sellers receive 50¢ a pack less A Tax on Buyers Ø། Again, with no tax, the equilibrium price is $3.00 a pack. Ø། A tax on buyers of $1.50 a pack is introduced. Ø། Demand decreases and the curve D − tax on buyers shows the new demand curve. Ø། The price received by sellers falls to $2.50 a pack and the quantity decreases. Ø། The price paid by buyers rises to $4.00 a pack. So with the tax of $1.50 a pack, buyers pay $1.00 a pack more and sellers receive...
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This note was uploaded on 03/29/2014 for the course ECON 101 taught by Professor Vanderwaal during the Spring '08 term at Waterloo.

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