Suppose the 2005-2007 short run demand for oil, in billions of barrels, can be expressed as Q=35.5 - 0.03P and the short run supply can be expressed as Q = 32 + 0.04P. If government imposes a tax of $5 per barrel, who will pay the tax?

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    The seller pays the $5.00 tax.
     The buyer pays the $5.00 tax.
     The buyer pays $2.86 of the $5.00 tax and the seller pays $2.14.
     The buyer pays $2.14 of the $5.00 tax and the seller pays $2.86.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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The buyer pays $2.86 of the $5.00 tax and the seller pays $2.14.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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