Refer again to the market in Question 7. Suppose the government charges a tax on

Question

Refer again to the market in Question 7. Suppose the government charges a tax on bobcat fur, payable by the buyer. Using the elasticity method, calculate the share of the burden of the tax that falls on the seller. (Choose the closest answer from the list below) 0% 20% 40% 60% 80% 100% (Based on real data.) Last year in Calgary, a 2.7% increase in the average sale price of a home was accompanied by a 6.6% drop in the number of homes sold. This is consistent with: A fall in demand and a rise in supply A rise in demand and a fall in supply A fall in both supply and demand A rise in both supply and demand a. and c. b. and d. b. and c. a. and d. None of the above

Explanation / Answer

Q 9)

D- 60%

10)a) a fall in demand and a rise in supply

this is due to the fact that higher prices would lead to higher quantity being supplied and at the same time lead to a decrease in the demand.

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