題組內容

五、A good is traded in a perfectly competitive market. The demand function is given by X = 75 - 5P, where X is the quantity demanded, and P is the price.

1. Assume the supply is perfectly elastic at the price P = 10. Please calculate the tax revenue, and the tax incidence on the buyer and seller, respectively, if an ad valorem tax at a rate of t = 0.2 is introduced. (9分)