1. Consider the market for car tires. Suppose the government issued a tax on car tires. If the buyer pays a larger portion of the tax, what does that imply about the demand or supply curve and their elasticity?
2. What happens to consumer surplus and producer surplus when the government implements a tax?
3. In your textbook, it analyzes why taxes cause deadweight losses. What is their reasoning? Do you think a subsidy would produce a deadweight loss? Why or why not?