A market is described by the equations Q_d = 100

Question

A market is described by the equations Q_d = 100 - P, and Q_s = P. A tax of $10 is placed on the seller of the product such that he will receive less to take home than the original equilibrium price. Therefore, the new supply equation becomes Q_s = (P - T). Does the seller pay the whole $10 of the tax burden? How much does the seller pay? How much does the buyer pay? Why do they split the burden in this way?

Quizplus · Accepted Answer

The Answer of A market is described by the equations Q_d = 100 - P, and Q_s = P. A tax of $10 is placed on the seller of the product such that he will receive less to take home than the original equilibrium price. Therefore, the new supply equation becomes Q_s = (P - T). Does the seller pay the whole $10 of the tax burden? How much does the seller pay? How much does the buyer pay? Why do they split the burden in this way?

A Market Is Described by the Equations Qd = 100