Calculate the incidence of tax on buyers and sellers

Reference no: EM133440542

Question: Suppose the government imposes a new tax on cigarettes that leads to increase in price from $35 to $40 a box. The demand changes from 450 units to 425 units and supply changes from 750 to 670 units. Calculate the incidence of tax on buyers and sellers. What does your answer imply about elasticity of demand (is it elastic or inelastic)?

Reference no: EM133440542

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