How is the burden of tax shared between buyers and seller

Reference no: EM131090432

The demand and supply function of hockey sticks is given by:

Qd = 286 - 20P
Qs = 88 + 40P

In order to raise revenue to finance minor hockey so that Canada can continue its gold medal streak at the Olympics, the federal government decides to impose a tax of $2 per hockey stick sold, to be paid by the buyers of hockey sticks.

a. Determine the equilibrium price and quantity of hockey sticks both before and after the tax. How is the burden of tax shared between buyers and seller?

b. How many hockey sticks would be sold before the tax is imposed? After the tax?

c. Graph the supply and demand curves for hockey sticks both before and after the tax.

d. What would happen if the tax was paid by sellers of hockey sticks instead of buyers?

Reference no: EM131090432

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