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In each part below, assume that the government imposes a per-unit sales tax and that the supply curve is upward-sloping. In industry X, consumers buy
- In each part below, assume that the government imposes a per-unit sales tax and that the supply curve is upward-sloping.
- In industry X, consumers buy the same quantity no matter what the price is.
- Using a correctly labeled graph, show what happens to the quantity sold when the tax is imposed.
- How will the burden of the tax be distributed between buyers and sellers?
- In industry Y, the market demand curve is perfectly elastic.
- Using a correctly labeled graph, show what happens to the price of the good that the consumers pay when the tax is imposed.
- How will the burden of the tax be distributed between buyers and sellers?
- In industry Z, the market demand curve is downward-sloping. Using a correctly labeled graph, shade the area that represents total tax revenues.
- In industry X, consumers buy the same quantity no matter what the price is.
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