Commodity taxes on a graph


Show the effects of the following commodity taxes on a graph. For each tax clearly illustrate and label the tax burden of consumers and producers.

a. An ad valorem tax levied on producers of a good for which the supply curve is upward sloping and the demand curve is downward sloping.

b. A unit tax levied on producers of a good for which demand is infinitely elastic.

c. An ad valorem tax levied on consumers of a good for which demand is very elastic and supply is perfectly inelastic.

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Microeconomics: Commodity taxes on a graph
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