Calculate the excess burden of a tax of 10% for a good with compensated elasticity of demand

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Calculate the excess burden of a tax of 10% for a good with compensated elasticity of demand of 0.5 (in absolute value), a price before tax of $1.00, and a quantity demanded of 1 million units. Explain what happens to the excess burden if we consider a tax of 20% instead.
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Public Finance

ISBN: 978-1111526986

2nd edition

Authors: John E. Anderson

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