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The market for hotel rooms is in equilibrium as in the graph for question 1 with the equilibrium price of $100 and equilibrium quantity of 100 hotel rooms. Suppose the government imposes a tax on buyers of $60 per room.
1. What is the new equilibrium quantity of hotel rooms after the $60 tax? Answer = _______ hotel rooms
2. What is the (effective) price that buyers pay (PB) after the $60 tax? Answer = $______
3. What is the (effective) price that sellers receive (PS) after the $60 tax? Answer = $ ______
4. What is the incidence of the $60 tax on buyers? Answer = $_________
5. What is the incidence of the $60 tax on sellers? Answer = $__________
