If an excise tax of 4 leads to an increase in the price of


Gadgets are produced and sold in a competitive market. When there is no tax, the equilibrium price is $20 per gadget. The own-price elasticity of demand for gadgets is 0.5. If an excise tax of $4 leads to an increase in the price of gadgets to $24, what must be true about the own-price elasticity of supply for gadgets?

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Econometrics: If an excise tax of 4 leads to an increase in the price of
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