Question
Suppose that the equilibrium price of 2-liter bottles of soda is $4. The government wants to decrease the consumption of soda and levies a
Suppose that the equilibrium price of 2-liter bottles of soda is $4. The government wants to decrease the consumption of soda and levies a tax of $2 on each unit sold. If the demand for 2-liter bottles of soda is relatively inelastic, what do we expect the new price paid by consumers to be? Briefly explain your answer. (Hint: there is a range of correct answers).
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
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