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(Solved): The following graph shows the dally market for jeans. Suppose the government institutes a tax of \( ...
The following graph shows the dally market for jeans. Suppose the government institutes a tax of \( \$ 46.40 \) per pair. This places a wedge between the price buyers pay and the price sellers recelve.
Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table: The burden of the tax falls more heavily on the less \( - \) elastic side of the market.
Expert Answer
price elasticity of demand over here= {(Q2 - Q1) / [(Q2 + Q1) / 2]} / {(P2 - P1) / [(P2 + P1) / 2]} ={(210-250)/[(210+250)/2]/{(140-100)/[(140+100)/2]