DSE 2011 Question 11: Taxation: incidence and efficiency
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
Tap an option to check your answer.
Answer and worked solution
Checking your account…
Plain-text version
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.