A few days ago
Incidence of tax? Econ homework help!?
I need some help on my econ homework. Here is the problem…
The market for taxicab rides in Madison is characterized by demand Qd= 1000- 20P and supply Qs= 10P – 50.
a) The municipal government sets a quota of 200 rides. Is this quota binding? What is the quota rent?
b) If the government decided to achieve their goal via an exercise tax insted, what is the amount of excise tax that would achieve a quantity reduction to 200 rides?
c) Suppose the government has set the excise tax you’ve found in b0. What is the tax revenue the government gets from the tax? What is the incidence of the tax to buyers and sellers?
Top 1 Answers
A few days ago
Favorite Answer
1–again, the govt is poking its nose where it does not belong
2—the cab drivers are going to admit the smallest amount. they may collect the tax, but they will not turn it in
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