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My calculation gave me B, but I dont think that is correct. Suppose that we are in the salt market and the government implements an

My calculation gave me B, but I dont think that is correct.

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Suppose that we are in the salt market and the government implements an excise tax on salt. The price elasticity of demand for salt equals 2 [ED=2} and the price elasticity of supply for salt equals 1 (E51). What is the portion of the tax that consumers will be burdened with? Is this realistic given the market we are in? 0 Consumers will be burdened with 1i'3 ofthe tax; this is realistic given that salt is a small percentage of individuals budgets and therefore the price elasticity of demand should be inelastic or less than 1, so we would expect consumers to bear a smaller portion of the tax relative to producers. 0 Consumers will be burdened With 1G ofthe tax; this is not realistic given that salt is a small percentage of individual's budgets and therefore the price elasticity of demand should be inelastic or less than 1, so we would expect consumers to bear a greater portion of the tax relative to producers. 0 Consumers will be burdened with 213 of the tax; this is not realistic given that salt is a small percentage of indiVidual's budgets and therefore the price elasticity of demand should be elastic or greater than 1, so we would expect consumers to bear a greater portion ofthe tax relative to producers. 0 Consumers will be burdened With 213 of the tax; this is realistic given that salt is a small percentage ofindividual's budgets and therefore the price elasticity of demand should be inelastic or less than 1, so we would expect consumers to bear a greater portion of the tax relative to producers

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