Explain Why It Is That How Much Consumers Pay for an Excise

question 109

Essay

Explain why it is that how much consumers pay for an excise tax depends on how responsive they are to a given change in market price.

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Definitions:

SST

Total Sum of Squares, a measure in statistics that quantifies the total variance in a dataset.

Yearly Income

The total amount of money earned by an individual or entity in one year.

Estimated Regression

A statistical process for estimating the relationships among variables, predicting one variable based on the value of others.

SSE

Sum of Squared Errors, a measure of the difference between the observed and predicted values in statistical models.