What is the governments tax revenue

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Reference no: EM13800449

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 240 luxury boats a week were bought. Now luxury boats are taxed at 20%.

1. What is the price that buyers pay? How is tax split between the buyer and the seller? What is the government's tax revenue?

2. On a graph, show the excess burden of this tax. Is this tax efficient?

Reference no: EM13800449

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