The competitive market for good has demand and supply . If the government imposes a sales tax of Rs per unit of the good on sellers, the equilibrium market price will increase by:
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DSE 2021 Question 24: Taxation: incidence and efficiency
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The competitive market for good X has demand x^d = 100 - p and supply x^s = 20 + 3p. 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. 7.50 (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.
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