Question
Suppose the government levies an excise tax on gasoline,let the tax be denoted by T. further, the gov' decides to impose a tax on sellers
Suppose the government levies an excise tax on gasoline,let the tax be denoted by T. further, the gov' decides to impose a tax on sellers
a-using a demand and supply framework, graphically illustrate and explain what happens to the equilibrium price paid by motorists, and the equilibrium net price to the seller?
b- also, show how the burden of this tax is shared by both sides of the market (economic insedence)?
c- Finally, explain what happens to the sheer of the burden borne by motorists if the demand for gas gets more inelastic relative to supply?
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