These questions were found in my SAT book and I thought the explanation was off, another persons perspective would give me a better understanding thank you.

can you help me summarize the overall findings and possible economic effects of the tax:

and Give your best opinion about the impact to

• consumers who are now "priced out" of the market for these products
• possible employment displacement in the medical device industry

Figure I. Potential Effect of a Tax on the Medical Devices Market Price P E. p* Supply" Demand" Q, Q > Quantity Source: CRS. Notes: Q is quantity, P is price, and E is the equilibrium price and quantity point. Original values are marked with an asterisk. A t subscript indicates price and quantity after the tax. The following subsections discuss the evidence supporting a highly clastic supply curve and an inelastic demand curve. Supply Responses to Price The medical device market has not previously been subject to an excise tax, thus there are no previous studies that indicate how the firms in the industry react to a tax. Nevertheless, there is reason to believe that the supply curve for this industry is infinitely elastic or close to it in the long run, and therefore that the tax is passed forward into the price. There are several reasons to support this view. First, as discussed earlier, much of the market, producing ordinary items such as needles and catheters, is described as competitive by the S&P analysis." In the S&P report, which focuses on large publicly traded firms, there are 37 manufacturers of medical devices along with 1 1 additional firms that produce supplies, along with two other large firms that have a division producing these goods. IRS tax return data show over 9,000 firms producing medical supplies and "Phillip Seligman, Industry Surveys: Healthcare Products & Supplies, S&P Capital 1Q, August 2013. Congressional Research Service 13