Assume that in the absence of taxes the price of x is 2


Assume that in the absence of taxes, the price of x is $2. Compare an ad valorem tax of 10 percent (on p^s), to a per unit tax of 20 cents with respect to (i.e. specify whether it results in bigger, smaller, or equal values of the following):

(a) the new equilibrium consumer price

(b) the new equilibrium producer price

(c) the new equilibrium value of the quantity purchased.

(d) tax revenue

(e) excess burden.

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Business Economics: Assume that in the absence of taxes the price of x is 2
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