Suppose the Supply Curve Is Perfectly Inelastic and the Equilibrium

question 114

Essay

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

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Definitions:

Wheel Of Retailing

A theory that describes how retail businesses start with low prices and low margins, then upgrade their operations and raise prices as they establish themselves.

Highest Prices

The top price point in the market for a product or service, often associated with luxury or high-quality offerings.

New Forms

Innovative or novel structures, ideas, or methods in various contexts, especially in technology, art, and business.

Same-Store Sales Growth

A retail metric that compares the revenue from stores open for more than a year over a specific period to showcase a company's organic growth.