The inverse demand for table salt is π = πππ , while the inverse supply of table salt is
ππ +π
π = ππ + πππ.
a. Find the equilibrium price of table salt before AND after the imposition of a 40% ad valorem tax on the
consumers of table salt. [2]
b. Describe the distribution of the burden (incidence) of this ad valorem tax between consumers and
producers. [2]
c. Find and interpret the price elasticity of supply (ππ) at the after-tax equilibrium price and quantity. [2]
"2qs=190"
"qs=95"
"1.4(10+2qs)=200"
"qs=66.4"
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