Problem
Use the following information to work Problems 3 and 4. The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats, the price is $1 million and 240 luxury boats a week are bought. Now luxury boats are taxed at 20 percent
1. What is the price that buyers pay? How is the tax split between the buyer and the seller? What is the government's tax revenue?
2. On a graph, show the excess burden of this tax. Is this tax efficient?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.