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Suppose that in the market for soda beverages demand is QD=90-20P and supply is QS=30P-10. In an attempt to contain consumption of sweetened beverages, the
Suppose that in the market for soda beverages demand is QD=90-20P and supply is QS=30P-10. In an attempt to contain consumption of sweetened beverages, the local government is considering the introduction of a $1 per bottle tax on soda. Suppose instead that the tax was collected from buyers on top of the market price (a buyer tax) and that the tax was only 50% salient.
Using the calculus based comparative statics formulas, evaluate how the tax would affect the gross price and the net price in this case.
Illustrate your findings in a diagram
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