Computing tax incidences for seller and buyer

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Q1) Demand relationship for good is P = 25 - 3Q. Supply relationship for good is P = 5 + Q. Who bears economic incidence of tax if there is a $1 per unit tax on buyer of this good? Who bears statutory incidence? Compute deadweight loss from this $1 per unit tax and how much tax revenue government will get from tax. In determining tax incidence burden, compute tax incidences for both seller and buyer and sketch graph.

Reference no: EM1310605

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