15.5 Returning once more to the broccoli market described in Problem 15.1, suppose the government instituted a $45 per-hundred-bushel tax on broccoli.

a. How would this tax affect equilibrium in the broccoli market?

b. How would this tax burden be shared between buyers and sellers of broccoli?

c. What is the excess burden of this tax?

d. Suppose now the demand for broccoli shifted to Q 2,200 15P.

Answer parts

(a) and

(b) for this alternative demand curve.

e. Suppose now that the broccoli market is characterized by the original demand curve described in Problem 15.1, but the supply curve is Q 10P 800.

Answer parts

(a) and

(b) for this case.

f. What do you conclude by comparing these three cases of tax incidence we have examined for the broccoli market?