Homework Help: Macroeconmics

Posted by Sue on Monday, May 24, 2010 at 10:01pm.

to raise funds at providing more support for public schools,a state government has just imposed a unit excise tax equal to $4 for each monthly unit of telephone services sold by each telephone company operating in the state. The diagram below depicts the position of the demand and supply curves for telephone services before the unit excise tax was imposed. Use this diagram to determine the position of the new market supply curve now that the tax was imposed.

a. Does imposing the $4-per-month unit excise tax cause the market price of telephone services to rise by $4 per month?why or why not?

b. What potion of the $4-per-month unit excise tax is paid by consumers? What portion is paid by providers of telephone services?

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