The supply of luxury boats is perfectly elastic the demand, Ask an Expert

Economics

The supply of luxury boats is perfectly elastic, the demand for luxury boats is unit elastic, and with no tax on luxury boats, the price is $1 million and 240 luxury boats a week were bought. Now luxury boats are taxed at 20%.

1. What is the price that buyers pay? How is tax split between the buyer and the seller? What is the government's tax revenue?

2. On a graph, show the excess burden of this tax. Is this tax efficient?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91370466

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