Problem
1. Why is the relative size of crowding out inefficiencies dependent only on the elasticity of demand and not on the elasticity of supply?
2. What happens to the equilibrium price and quantity of a good when a tax is imposed on the good? Why does a tax create a wedge between the price the consumer pays and the price the producer receives?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.