Page 76 in Anderton shows the extremes of tax incidence.
for homework, draw four diagrams showing these scenarios:
- supply is normal ; demand is inelastic
- supply is normal ; demand is elastic
- demand is normal ; supply is inelastic
- demand is normal ; supply is elastic
for each diagram, write an explanation of who ends up paying most of the tax.
Part B
Explain why taxes on cigarettes hit smokers more than they do the peddlars.
Part C
Finish answering the supported choice questions on tax incidence and subsidies.
Keep checking back for part D
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