Determinants of demand and supply of any product

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Under the demand and supply analysis, let us assume that the price of Hard wood is $50 per unit. Now the government has imposed 5 % tax to the seller which increased the cost of production. Explain the following with the help of diagram.

i. Do the cost of production affects Demand and Supply? (explain with the reference of necessities and Non-essential goods)

ii. Will there be a shift or movement along the supply curve? (explain with the reference of necessities and non-essential goods)

iii. In order to maintain the same profit as before imposition of tax, how much price the seller should increase presuming that the a) demand for the product is perfectly inelastic and

b) demand of the product is perfectly elastic

iv. What are the determinants of demand and supply of any product.

Reference no: EM132526636

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