Suppose that the price of rice is Tk.65 per kg and 75,000 kg of rice is consumed in equilibrium. A percentage tax on rice is imposed which creates an excess burden of Tk.153,563. If the compensated price-elasticity of demand for rice is 0.7, what is the tax rate?
Suppose that the price of rice is Tk.65 per kg and 75,000 kg of rice is consumed in equilibrium. A percentage tax on rice is imposed which creates an excess burden of Tk.153,563. If the compensated price-elasticity of demand for rice is 0.7, what is the tax rate?
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter19: Elasticity
Section: Chapter Questions
Problem 14QP
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