Essay
A market is described by the equations Qd = 100 - P, and Qs = P. A tax of $10 is placed on the seller of the product such that he will receive less to take home than the original equilibrium price. Therefore, the new supply equation becomes Qs = (P - T). Does the seller pay the whole $10 of the tax burden? How much does the seller pay? How much does the buyer pay? Why do they split the burden in this way?
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The original equilibrium is 100 – P = P....View Answer
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