*4.10 According to the European Commission's Weekly Oil Bulletin for June 12, 2017, taxes made up 66.2% of the 1.51 per liter consumer price of gasoline in Italy. Included in the tax total is an excise tax of 0.728 per liter levied by the national government, plus excise taxes applied in certain regions; for example, the additional tax in Molise is 0.031 per liter. Suppose that the national and regional governments each increased their excise taxes on gasoline by 1 cent and that the former increases the retail price of gasoline by 0.5 cents, while the latter increases it by 1 cent. What is the incidence of each of these taxes on consumers and producers? Explain why the incidence on consum- ers in a competitive market would be lower for an increase in the national tax than for an increase in a regional tax. How much more elastic is the supply elasticity for any one of the 20 regions in Italy compared to the national supply elasticity? (Hint: Use Equations 3.12 and 8.7 in answering this question.) A |3 1 - 0 1 11 *4.10 According to the European Commission's Weekly Oil Bulletin for June 12, 2017, taxes made up 66.2% of the 1.51 per liter consumer price of gasoline in Italy. Included in the tax total is an excise tax of 0.728 per liter levied by the national government, plus excise taxes applied in certain regions; for example, the additional tax in Molise is 0.031 per liter. Suppose that the national and regional governments each increased their excise taxes on gasoline by 1 cent and that the former increases the retail price of gasoline by 0.5 cents, while the latter increases it by 1 cent. What is the incidence of each of these taxes on consumers and producers? Explain why the incidence on consum- ers in a competitive market would be lower for an increase in the national tax than for an increase in a regional tax. How much more elastic is the supply elasticity for any one of the 20 regions in Italy compared to the national supply elasticity? (Hint: Use Equations 3.12 and 8.7 in answering this question.) A |3 1 - 0 1 11