Statement about the tax incident

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The supply of luxury boats is perfectly elastic. The demand for luxury boats is unit elastic , and with no tax on luxury boats, the price is $1 million and 320 luxury boats a week are bought. Now luxury boats are taxed at 40 percent.

Question one: After the tax is imposed, the buyer pays ____ for a luxury boat. Answer to Question One: $1.40 million

Question two: Choose the statement about the tax incident that is correct. Answer to Question two: The buyer pays all the tax.

Question three: (I need the answer to this one) The government raises tax revenue of $____ million (answer to 1 decimal place)

Reference no: EM131439080

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