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13 Dec 2019
A market in perfect competition is in equilibrium. Let the demand's price elasticity be -1.25 and the price elasticity of the offer is 0.25. If a tax of $ 10 per unit is introduced, who will then carry the largest part of the tax burden?
A. Consumers, since demand is relatively more elastic than the supply
B. Consumers, then demand. is relatively more inelastic than the supply
C. Manufacturers, as the supply is relatively more elastic than demand.
D. The producers, as the supply is relatively more inelastic than demand.
Please show and explain
A market in perfect competition is in equilibrium. Let the demand's price elasticity be -1.25 and the price elasticity of the offer is 0.25. If a tax of $ 10 per unit is introduced, who will then carry the largest part of the tax burden?
A. Consumers, since demand is relatively more elastic than the supply
B. Consumers, then demand. is relatively more inelastic than the supply
C. Manufacturers, as the supply is relatively more elastic than demand.
D. The producers, as the supply is relatively more inelastic than demand.
Please show and explain
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