Question

Suppose the supply cf a good is given by the equation QS 50P -50, and the demand for the good is given by the equation oD - 175 -25P, where quantity (Q) Is measured in milions of units and price (P) is measured in dolars per unt. The government decides to levy an excise tax of $3.00 per unit on the good, to be paid by the seller. Calculate the value of each of the following, before the tax and after the tax, to complete the table that follows: 1. The equilbrium quantity produced 2. The equllibrium price consumers pay for the good 3. The price received by sellers After Tax Before Tax Equilibrium Quantity (Millions of units) [ ▼] Equilibrium Price per Unit Paid by Consumers ˇ Price per Unit Received by Sellers Given the information you calculated in the preceding table, the tax incidence on cl jsumers is $3.0o per unit of the good, and the tax incidence on producers is per unit of the good in tax revenue from levying an excise tax of $3.00 per unit on this The government receives good. True or False: The price ultimately paid by the buyer (that is, the amount of money that the buyer pays including any applicable taxes) would have been different if the tax had been levied on buyers instead O True O False

Answer 1

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