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Questions › DSE › DSE 2011 › Q11
1 markPublic Economics › Taxation: incidence and efficiency › Tax incidenceModerateabout 3 min

DSE 2011 Question 11: Taxation: incidence and efficiency

The market for good XXX has the demand function D(p)=100−pD(p)=100-pD(p)=100−p and the supply function S(p)=20+3pS(p)=20+3pS(p)=20+3p where ppp is the price of good XXX. If the government imposes a sales tax of Rs. 10 per unit of the good on sellers, the equilibrium market price will increase by

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The market for good X has the demand function D(p)=100-p and the supply function S(p)=20+3p where p is the price of good X. If the government imposes a sales tax of Rs. 10 per unit of the good on sellers, the equilibrium market price will increase by (A) Rs. 10 (B) Rs. 7.5 (C) Rs. 5 (D) Rs. 0

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.

Practise Taxation: incidence and efficiencyMore on Tax incidence

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Question from the DSE 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.