Supply is P = 4Q, while demand is P = 20, where P is price in dollars
Question:
a. Find the equilibrium price and quantity (using both algebra and a graph).
b. If sellers must pay a tax of T = $4/ unit, what happens to the quantity exchanged, the price buyers pay, and the price sellers receive (net of the tax)?
c. How is the burden of the tax distributed across buyers and sellers and why?
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ac With the tax on sellers supply rises by the amount of the tax to P 4 4...View the full answer
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