Module 1 Problem 2A


Module 1 Problem 2A

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mparsons
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I am having trouble comprehending parts C and D on problem 2A. I am not quite grasping the concept to answer how the price and quantity will change and who will pay the most of the tax in both Jacob's and Rachel's perspectives. Thank you.


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anwu198
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Can someone please correct me if I am wrong.

I thought that Jacob actually has flat or flatter demand curse. Because the consumption behavior is likely to be changed by the price; so a small movement in the price will result in larger horizonal movement.

But IMO, the supply curse shalll stay rather steep or nearly vertical. Because the supply is not likely to be changed by the price as addresses by the question itself.

Can NEAS instructor clarify this?

[NEAS: Correct; the problem says this explicitly.]


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