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Suppose that the government enacts atax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply
Suppose that the government enacts atax on retail sales of road salt, which homeowners and businesses put on walkways and driveways. Assume that the supply of salt is perfectly elastic, due to the ease with which suppliers can stockpile the product. Before the tax, 800fifty-pound bags of road saltare sold at an equilibrium price of $5.5per bag. After the tax, 775bags are sold at $8per bag. How much revenue does thetax generate for the government?
What is the amount of the tax? $ per bag
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