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The town of Marble needs to impose a sales tax to finance a new public park. The two alternative proposals are for a tax of

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The town of Marble needs to impose a sales tax to finance a new public park. The two alternative proposals are for a tax of ten cents per slice on pizza, or a tax of ten cents per cup on coffee. Demand for pizza slices is given by P = 200 - 20Q, and demand for cups of coffee is given by P = 200 - 5Q. In both markets supply is given by P = 10 + Q. In which of these two markets would the burden of the tax fall more heavily on consumers? both would be the same O coffee O pizza Points possible: 3 If the town wants to tax as efficiently as possible (in the sense of generating as small a deadweight loss as possible), on which product should it impose the tax? O taxing either product would be equally efficient coffee pizza Points possible: 3

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