Illustrate with the help of a diagram, lower the price elasticity of demand, lower will be the per unit tax burden borne by the producers. (a) In the Demand-Supply analysis, what is meant by a Marshallian cross? Illustrate

(b) The demand and supply functions of a good are given by QD = 110 − 5P; QS = 6P where P, QD and QS denote price, quantity demanded and quantity supplied, respectively. Find the inverse demand and supply functions and the market equilibrium price and quantity.

(a) Lowering Price Elasticity of Demand and Tax Burden on Producers:

The concept of price elasticity of demand measures the responsiveness of quantity demanded to a change in price. When the demand for a good is inelastic (i.e., the percentage change in quantity demanded is less than the percentage change in price), consumers are less sensitive to price changes. In this scenario, producers bear a smaller portion of the tax burden compared to consumers when a per-unit tax is imposed.

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