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Suppose the supply curve and the demandVarious governments subsidize child-care services (see the Cross-Chapter Analysis Child-Care Subsidies). Suppose that the subsidy is s per hour
Suppose the supply curve and the demandVarious governments subsidize child-care services (see the Cross-Chapter Analysis "Child-Care Subsidies"). Suppose that the subsidy is s per hour of child-care service and the market is competitive. What formula can you use to calculate the incidence of the subsidy in terms of elasticities of supply (eta ) and demand (epsilon )? Part 2 The incidence of a child-care subsidy for consumers is: Part 3 A. epsilon equals (dQ/dp)/(p/Q). B. Upper Delta p/Upper Deltasequalseta/(etaplusepsilon ). C. Upper Delta p/Upper Deltasequalsepsilon/(etaplusepsilon ). D. Upper Delta p/Upper Deltasequalseta/(etaminusepsilon ). E. eta equals (dQ/dp)/(p/Q). curve both have unitary elasticity at all prices. The price increase to consumers resulting from a specific tax of $1 imposed on sellers will be Part 2 A. $1. B. zero. C. 50 cents. D. impossible to calculate without knowing the slope of the supply curve
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