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The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. (10') Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.

The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. (10') Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter5: Elasticity
Section: Chapter Questions
Problem 30CTQ: In a market where the supply curve is perfectly inelastic how does an excise tax affect the price...
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The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. a (10’) Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? b. (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.
Transcribed Image Text:The demand for rutabagas is Q= 2,000 – 300P and the supply of rutabagas is Q =-100 + 100P. a (10’) Who bears the statutory incidence of a $2 per unit tax on the sale of rutabagas? b. (25') Who bears the economic incidence of this tax? Explain. Hint: you need to calculate the consumers' tax burden and producers' tax burden respectively.
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