Question
Assume the supply elasticity of a product is 1 and the price elasticity of demand is 2. To alleviate the effects of a negative externality,
Assume the supply elasticity of a product is 1 and the price elasticity of demand is 2. To alleviate the effects of a negative externality, the government places a $2 per unit tax on this market, who will bear the larger burden of the tax?
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Step: 1
To determine who will bear the larger burden of the tax we need to compare the elasticities of suppl...
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
