P ($) 2.10 1.65 1.25 0.80 0.50 40 60 100 Q Note: Graph not drawn to scale. The government will introduce a $0.85 tax per pencil. Answer the following questions Prior to the introduction of the tax, what is the equilibrium price and equilibrium quantity in this a. market? b. After the $0.85 tax per pencil is imposed, what is the new price paid by buyers and the price received by sellers? What is the quantity of pencils that will be sold? C. Calculate the tax revenue d. Explain who bears the largest burden of the tax (larqest tax incidence).
P ($) 2.10 1.65 1.25 0.80 0.50 40 60 100 Q Note: Graph not drawn to scale. The government will introduce a $0.85 tax per pencil. Answer the following questions Prior to the introduction of the tax, what is the equilibrium price and equilibrium quantity in this a. market? b. After the $0.85 tax per pencil is imposed, what is the new price paid by buyers and the price received by sellers? What is the quantity of pencils that will be sold? C. Calculate the tax revenue d. Explain who bears the largest burden of the tax (larqest tax incidence).
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 10PA
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