Consider the market for luxury yachts. Assume the market is competitive.

a. Graph the market, assuming demand is more elastic than supply. Label clearly the equilibrium price and quantity.

b. Now suppose the government institutes a per-unit tax on buyers of luxury yachts. How does this affect the market? Show in your graph.

c. Who bears the larger share of the tax burden, buyers or sellers? How do you know?

d. In light of your answers to parts a. through c., evaluate the following statement: "Taxes on luxury goods are a good way of making the rich pay their fair share."