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. Suppose the supply of housing construction is infinitely elastic at a price of $150 per square foot. Currently 1 million sqare feet are built per month. If the price elasticity of demand for housing is 1, calculate the monthly excess burden of a 10 percent tax on housing construction. What is the monthly excess burden if the tax is 20 percent? Who will bear the incidence of the tax?

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supply ohousi canstruhon million sauo a- built per month elastHc a a price os.curret demandl S L N- 1.00o,0o Monthy excess burden, 2 Tax Rak, ar 10% : 2 2 스 -L x 1,000,000 150 x(0.11 x L 2 so, morthy excess burden n canstrucion is $ 750, 000 .e 10% tax on housin EB 3,000,000 per month 20% on hous 50,-the monthly excess burden Construchơ) 1s dB 3,000,000.The burden uii be auadruple ai doubled. Because e in his case, ~the ineidon ced-tex er^eed per^ecJb, eloalie suppl $ 165 180

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