Question

The congress is debating whether to put a new per unit tax on coffee and hires you in order to estimate the incidence on consumers and producers. A study from 2012 reveals that the price elasticity of demand at that moment was -0.3. On the other hand, a recent study reveals that price elasticity of supply today is 0.06. if quantity and price in 2012 were different than today, can you say anything about the incidence of the tax on consumers and suppliers?

Answer 1

u are so beautiful