Question

D Question 4 4 pts If a per-unit emission tax were levied on plastic makers according to the estimated lifetime emission of their plastics, would this tax be pushed onto consumers? What factors would influence the tax incidence, given what you know about consumer demand and producer supply for plastics? Use economic theory to justify your answer. 1 x, BIVA - A. IE3 - O N V G T x 12pt HTML Editoria E Paragraph 0 words

Answer 1

whether other this this Tor Tax would be . not bushed depends on to on the the consumers demand price ar elasticity for Plastic of is demand. relatively Since, elastic are many as there substitutes available in the market now. Plastic makers would not be able to shift shift major major portion of the tax on the buyers. The relative price elasticity of demand and supply influence the tax incidence. In this case, since demand is elastic, it can be depicted in the following diagram as- Imposition of tax will shift at the supply curve brice / leftwards to ss and new equilibrium Buyers & & whifts from point to bunden af seller's § 1 point Es where equilibrium burden - - quantity has decreased to od and price paid by buyers de has increased to on and price by sellers has received reduced to of. . . Thus, only some push portion of the tax would be onto consumer -- - - GA