Many states do not levy a sales tax on professional services, e.g., the ser- vices of lawyers, doctors, accountants and the like. If you visit one of these professionals, they do not add a sales tax to their fee for services.

a. Draw a supply and demand diagram that reasonably represents the mar ket for, say, lawyers' services in the short-run, and explain why you have drawn the curves as you have. Pay particular attention to the slopes of the demand and supply curves, in particular, whether they appear flat or steep, and justify why you have drawn them as you have.

b. If a sales tax is levied on these services, who will pay most of the tax in the short run-clients or the lawyers?

c. How does the market for lawyers' services and the shares of tax paid by the lawyers versus their clients respond in the long run to this imposition of taxes?