Green et al. (2005) estimate that the demand elasticity is minus0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are minus0.68 and 0.73 for cotton and minus0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, what incidence would fall on consumers? The incidence of a specific almond tax that would fall on consumers is nothing percent. (Enter numeric responses using real numbers rounded to one decimal place.)

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Business

Carina Ayers

17 February, 13:04

Green et al. (2005) estimate that the demand elasticity is minus0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are minus0.68 and 0.73 for cotton and minus0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, what incidence would fall on consumers? The incidence of a specific almond tax that would fall on consumers is nothing percent. (Enter numeric responses using real numbers rounded to one decimal place.)

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Isla Booth · Answer 1

The numeric response for the question using real numbers rounded to one decimal place is given as below.

Explanation:

Tax incidence for almonds is (12 / (12 + 0.47)) = 0.96

for cotton (0.73 / (0.73 + 0.68)) = 0.52 and

for processing tomatoes is (0.64 / (0.64 + 0.26)) = 0.71