Minnesota and Tennessee, among other states, have recently begun to tax the sales of healthcare providers, such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios: (a) The demand for medical services is completely inelastic while the supply curve is positively sloped to the right. (b) The demand curve is downward sloping and supply is completely inelastic (for this case, it is best to shift the demand curve downward by the amount of the per-unit tax). (c) The demand curve is downward sloping and the supply curve is positively sloped. (d) When does the consumer or health care provider pay a larger portion of the tax? (e) Why?
Minnesota and Tennessee, among other states, have recently begun to tax the sales of healthcare providers, such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios: (a) The demand for medical services is completely inelastic while the supply curve is positively sloped to the right. (b) The demand curve is downward sloping and supply is completely inelastic (for this case, it is best to shift the demand curve downward by the amount of the per-unit tax). (c) The demand curve is downward sloping and the supply curve is positively sloped. (d) When does the consumer or health care provider pay a larger portion of the tax? (e) Why?
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter19: Elasticity
Section: Chapter Questions
Problem 13QP
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Minnesota and Tennessee, among other states, have recently begun to tax the sales of healthcare providers, such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios:
(a) The demand for medical services is completely inelastic while the supply curve is positively sloped to the right.
(b) The demand curve is downward sloping and supply is completely inelastic (for this case, it is best to shift the demand curve downward by the amount of the per-unit tax).
(c) The demand curve is downward sloping and the supply curve is positively sloped.
(d) When does the consumer or health care provider pay a larger portion of the tax?
(e) Why?
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