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4 Elasticity & Impact of Tax

4 Elasticity & Impact of Tax

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Published by deep_ibs

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Published by: deep_ibs on Sep 03, 2009
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11/27/2012

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Copyright © 2004 South-Western/Thomson Learning
How Taxes on Buyers (and Sellers) AffectMarket Outcomes
Taxes discourage market activity.When a good is taxed, thequantity sold is smaller.Buyers and sellers sharethe tax burden.
 
Copyright © 2004 South-Western/Thomson Learning
Elasticity and Tax Incidence
Tax incidence
is the manner in which the burden of a tax is shared among participants ina market.
 
Copyright © 2004 South-Western/Thomson Learning
Elasticity and Tax Incidence
Tax incidence is the study of who bears the burden of a tax.Taxes result in a change in market equilibrium.Buyers pay more and sellers receive less.

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