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Assume both markets are initially in equilibrium with identical equilibrium prices (P0A=P0B) and identical equilibrium quantities (Q0A=Q0B). The government then imposes an excise tax of
Assume both markets are initially in equilibrium with identical equilibrium prices (P0A=P0B) and identical equilibrium quantities (Q0A=Q0B). The government then imposes an excise tax of $1/unit on goods traded in both markets. Which of the following statements is true? Please select the best response. Consider the two markets, A and B, whose Demand and Supply curves are depicted in the diagram below. Question 14a.png Assume both markets are initially in equilibrium with identical equilibrium prices (P0A=P0B) and identical equilibrium quantities (Q0A=Q0B). The government then imposes an excise tax of $1/unit on goods traded in both markets. Which of the following statements is true? Please select the best response. The incidence of the tax on consumers is higher in Market A than in Market B. The incidence of the tax on producers is lower in Market A than in Market B. The relative price elasticity of demand is lower in Market B compared to Market A. All of the above statements are true
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