Essay
Answer the following questions regarding taxes.
a. Suppose the demand for insulin pumps is QD = 2,000 and the supply of insulin pumps is QS = 0.5P - 1,000. What is the price that sellers receive per pump? Suppose the government imposes a tax of $400 per pump on sellers. What after-tax price per pump do sellers receive?
b. In the market for organic fruit, the elasticity of supply is 0.75 and the elasticity of demand is -1.25. If there is a tax of $2 per unit on organic fruit, what share of the tax is paid by buyers and what share is paid by sellers?
Correct Answer:
Verified
a.
QD = QS
2,000 = 0.5P - 1,000
3,000 = 0....View Answer
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Correct Answer:
Verified
QD = QS
2,000 = 0.5P - 1,000
3,000 = 0....
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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