Economics Homework Help

Price Elasticity of Supply and Price Elasticity of Demand Questionnaire

 

I’m studying and need help with a Macro Economics question to help me learn.

a.  If the price elasticity of demand is equal to 2, the price elasticity  of supply is equal to 3, and government imposes a $10 tax on this  market, what fraction of this $10 tax will be paid by the buyers? What  fraction of this tax will be paid by the sellers?

b.  If the price elasticity of demand is equal to 4, the price elasticity  of supply is equal to 2, and government imposes a $3 tax on this market,  what fraction of this $3 tax will be paid by the buyers? What fraction  of this tax will be paid by the sellers? 

c.  Suppose government wants to impose a $2 tax on the labor market. Will  the market outcomes be any different if (a) the entire $2 tax was  imposed on workers, (b) the entire $2 tax was imposed on employers, (c)  $1 tax is imposed on workers and $1 tax is imposed on employers? Why or  why not?