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Study the Zucchini market. Suppose the equilibrium price E1 is initially $3.00 a pound. Suppose the government is taxing the production of zucchinis. The amount
Study the Zucchini market. Suppose the equilibrium price E1 is initially $3.00 a pound. Suppose the government is taxing the production of zucchinis. The amount of the tax is $1.20 per pound. The supply for zucchinis is neither elastic nor inelastic and the demand for zucchinis is neither elastic nor inelastic. Suppose that the new equilibrium price E2 is $4.00. The quantities exchanged are 200 pounds of zucchinis at $3.00 a pound, 100 pounds of zucchinis at $4.00 a pound.
The tax burden faced by producers is:
$0.20
$0.80
$1.00
$1.20
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