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What is the monthly excess burden if the tax is 20 percent

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Suppose the supply of housing construction is infinitely elastic at a price of $150 per square foot. Currently 1 million square feet are built per month. If the price elasticity of demand for housing is -1, calculate the monthly excess burden of a 10 percent tax on housing construction. What is the monthly excess burden if the tax is 20 percent? Who will bear the incidence of the tax?

Reference no: EM132414829

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