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A province needs to raise money, and the finance minister has a choice of imposing a lump sum sales tax of the same amount on
A province needs to raise money, and the finance minister has a choice of imposing a lump sum sales tax of the same amount on one of two previously untaxed goods, good A and good B. Good A and B currently trade at the same price and quantity in their respective markets. a. Assume both the demand and supply of good A are more price elastic than demand and supply for good B. If the finance minister wants to maximize tax revenue, which good should she tax? If the finance minister wants to minimize deadweight loss, which good should she tax? Explain briefly, you can use a graph to explain. b. Assume demand for good A and good B is identical in terms of price elasticity, but supply for good A is more price inelastic than for good B. If the finance minister wishes to minimize tax burden on producers, which good should she tax? If the finance minister wants to maximize tax revenue, which good should she tax? Explain briefly, you can use a graph to explain. c. Assume supply for good A and good B is identical in terms of price elasticity, but demand for good A
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