Suppose the federal government decides to impose a sales tax of $1.00 per pizza. Briefly explain whether

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Suppose the federal government decides to impose a sales tax of $1.00 per pizza. Briefly explain whether you agree with the following statement, made by a representative of the pizza industry:

The pizza industry is very competitive. As a result, pizza sellers will have to pay the whole tax because they are unable to pass any of it on to consumers in the form of higher prices. Therefore, a sales tax of $1.00 per pizza will result in pizza sellers receiving $1.00 less on each pizza sold, after paying the tax. Illustrate your answer with a graph?

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Economics

ISBN: 978-0134106243

6th edition

Authors: R. Glenn Hubbard

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