Consumers to put up the most resistance to the tax

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Reference no: EM131009749

Suppose the demand for gasoline is QD = 75 – 25PD and supply is QS = 30 + 20PS, where prices are expressed in dollars per gallon. How does a $0.40 per gallon tax affect the equilibrium price and quantity of gasoline (show both the pre-tax and post tax equilibria)? What is the elasticity of demand and supply? In the short-run do you expect producers or consumers to put up the most resistance to the tax? What about in the long-run? Explain your answer with sentences.

Reference no: EM131009749

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