Chapter 1 Study Questions with Answers

60% of the tax is paid by consumers (the more inelastic group), and thus 40% of the tax is paid by producers. (Note that this is confirmed by your results in Step one; the price rose by $3.33, or 60% of the $5 tax. Firms take home $23.33 - $5, or $18.33, after paying the tax, which is … ................
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