ECON 2030 Chapter : 4 27 16
Document Summary
Today"s menu: wednesday 27 april 2016: business, practice problems, chapter 8: 2, 3, 5, 23, final exam: next time, monday, 02 may, 12:30-2:30 pm in cox auditorium. % of tax bore by buyer = [e_s / (e_d + e_s)] * 100% Suppose gov. enacts a excise tax; e_d=2. 1, e_s=0. 9. Lower the number more inelastic sellers will bear more than 50% of the burden because it is more inelastic. % of tax bore by buyers = 0. 9/(2. 1+0. 9)*100% = 30% % of tax bore by sellers = 2. 1/(2. 1+0. 9)*100% = 70% Change in price by buyers increase by (30% of ) Change in price by sellers decreased by (70% of ) Taxes drive up the price that buyers pay, but it drives down the price that sellers receive.
