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hello, I'm having a problem in a public finance course: Adapt the proof in Appendix A to the case of a unit tax, i.e., where
hello, I'm having a problem in a public finance course:
"Adapt the proof in Appendix A to the case of a unit tax, i.e., where the after tax price isPb+tbinstead of(1+tb)Pb. Show that the obtained measure of excess burden equals0.5Pbqb2, whereb=tb/Pbis the ratio of the tax to the price.(Hint: First adapt equation (15A.2), then plug it into equations (15A.4) and (15A.1).)"
I am trying to upload the image of appendix A but it won't work.. therefore this elaboration, I don't understand why there is Pb in the final formula, instead of q/Pb..
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