5.8 If the government collects a $1 specific tax, what share of the tax is paid by...

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5.8 If the government collects a $1 specific tax, what share of the tax is paid by consumers and firms in each of the following cases? Explain why. (Hint: See Q&A 2.3. Depending on the shape of the curves, it may be easier to assume that the tax is collected from consumers or from firms.)

a. The demand curve is vertical at quantity Q and the supply curve is upward sloping.

b. The demand curve is horizontal at price p and the supply curve is upward sloping.

c. The demand curve is downward sloping and the supply curve is horizontal at price p.

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Managerial Economics And Strategy

ISBN: 9780135640944

2nd Global Edition

Authors: Jeffrey M. Perloff, James A. Brander

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