Economy, asked by khusi77, 1 year ago

what will be the effect on supply if there is reduction in per unit tax​

Answers

Answered by Anushkasingh456
2

It lowers the market price of the good somewhere between 0 and 100% of the tax rate. The exact number depends on the relative elasticities of supply and demand. Who benefits most from the tax reduction, and by how much, also depends on these elasticities.

The market equilibrium quantity produced and sold will increase, again by an amount according to the elasticities.

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