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Elasticity of Demand and Supply and Incidence of Taxation

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Added on  2020-05-28

Elasticity of Demand and Supply and Incidence of Taxation

   Added on 2020-05-28

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Running Head: ECONOMIC PRINCIPLESEconomic PrinciplesName of the StudentName of the UniversityAuthor note
Elasticity of Demand and Supply and Incidence of Taxation_1
ECONOMIC PRINCIPLESTable of ContentsAnswer 1..........................................................................................................................................2Answer i.......................................................................................................................................2Answer ii......................................................................................................................................2Answer 2..........................................................................................................................................3Answer i.......................................................................................................................................3Answer ii......................................................................................................................................4Answer iii.....................................................................................................................................5Answer 3..........................................................................................................................................6Answer i.......................................................................................................................................6Answer ii......................................................................................................................................6References........................................................................................................................................8NAME AND STUDENT IDPage1
Elasticity of Demand and Supply and Incidence of Taxation_2
ECONOMIC PRINCIPLESAnswer 1Answer iWhen government levies a tax, it creates burden on relevant group directly or indirectly(Mankiw 2014). In terms of economics, the distribution of direct or indirect tax burden betweenbuyers and sellers is known as incidence of the imposed tax.Answer iiBefore imposing any tax, the impact of the proposed tax should be evaluated in terms ofsupply, demand and their respective elasticity. This is studied in the microeconomic lesson-containing concept of elasticity of demand and supply and incidence of taxation. The main economic rationale behind imposition of any tax is to put some indirectrestriction on particular activity. More consumption of sugary drinks is bad for health and lead toseveral health hazard (Case, Fair and Oster 2014). Therefore, government aims at reducing theconsumption of sugar through sugary drinks. To achieve this objective sugary drinks are taxed. NAME AND STUDENT IDPage2
Elasticity of Demand and Supply and Incidence of Taxation_3

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