Demand for a product is described by the price-quantity curve p = 225 0.2g and supply is described by the by the price-quantity curve p = 45 +0.2q. How much should the government apply a tax per item to the supply so as to maximize tax revenue?
Demand for a product is described by the price-quantity curve p = 225 0.2g and supply is described by the by the price-quantity curve p = 45 +0.2q. How much should the government apply a tax per item to the supply so as to maximize tax revenue?
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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