How does elasticity affect the burden of a tax?
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7. How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagram.
8. Answer each of the following questions about supply and producer surplus.
a. What is producer surplus, and how is it measured?
b. What is the relationship between the cost to sellers and the supply curve?
c. Other things equal, what happens to producer surplus when the price of a good rises?
Illustrate your answer on a supply curve.
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