The supply function for a product is given by: . A unit tax is imposed on the supplier. The new supply function becomes:
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CUET-PG 2020 Question 26: Taxation: incidence and efficiency
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The supply function for a product is given by: Qₛ = 3P - 4. A unit tax t is imposed on the supplier. The new supply function becomes: (A) Q′ₛ = 3P - 4 + t (B) Q′ₛ = 3(P - t) - 4 (C) Q′ₛ = 3P - 5 - 3t (D) Q′ₛ = 3P - 4 - t
Also written as: The supply function for a product is given by: Q_s = 3P - 4. A unit tax t is imposed on the supplier. The new supply function becomes:
Taxation: incidence and efficiency has come up 79 times in 7 exams since 2009.
What this question tests
This question is on Tax incidence, part of Taxation: incidence and efficiency in Public Economics.
Who actually bears a tax, whoever the law makes pay.
TestStop has 26 past-paper questions on this subtopic.
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