Given: Stuff initially (without tax) sells for $60/unit, and 500 units/month are sold. A tax T = $4/unit on Stuff causes its market price to rise by 5% and quantity bought & sold drops by 10%. Please type your properly-numbered answers in the box below.
1) How much of the tax T is shouldered by the buyers, in $/unit? Show how you got this.
2) How much of the tax T is shouldered by the sellers, in $/unit? Show how you got this.
3) How much tax revenue would the government receive from the tax on Stuff?