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Suppose the demand for bread is D(p), where dD/dp < 0, and the supply of bread is S(p - t), where t is a unit tax on bread.
Illustrate equilibrium with price on the Y-axis and quantity on the X-axis in which the t > 0.
Show the economic incidence of the tax on the consumer's price (dp*/dt) depends upon the price elasticity of demand and the price elasticity of supply.
Compute dp*/dt where QDemand= Ap?for?<0andQsupply=Bpηforη>0. Under what conditions does the incidence of the tax fall heavily on consumers?
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describe national income
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If the price of DVD players decreases, we can expect that the demand for DVDs will: a. increase. b. be unaffected. c. shift left. d. Decrease
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