Who pays the tax on the market A – consumers and/or firms? Is it a rule in the competitive markets? Derivethe difference between price after and before the introduction of the tax

In a market, both consumers and firms can end up paying the tax, depending on the elasticity of demand and supply.

1. If the demand is inelastic (consumers are not sensitive to price changes), consumers will bear most of the tax burden. This is because they will continue to buy the product even if the price increases due to the tax.

2. If the supply is inelastic (firms cannot easily change their production levels), firms will bear most of the tax burden. This is because they cannot easily reduce their production to avoid the tax, and so they will have to pay it.

3. If both demand and supply are elastic (both consumers and firms can easily adjust their behavior), the tax burden will be shared between them.

This is not a rule in competitive markets, but rather a general principle that applies to all markets. The actual distribution of the tax burden depends on the specific characteristics of each market.

To derive the difference between the price after and before the introduction of the tax, you would need to know the amount of the tax and the elasticity of demand and supply.

1. If the tax is a specific amount per unit, the price after the tax will be the price before the tax plus the tax (if the tax is fully passed on to consumers), or the price before the tax (if the tax is fully absorbed by firms).

2. If the tax is a percentage of the price, the price after the tax will be the price before the tax divided by (1 - tax rate) (if the tax is fully passed on to consumers), or the price before the tax (if the tax is fully absorbed by firms).

3. If the tax burden is shared, the price after the tax will be somewhere between these two extremes, depending on the elasticity of demand and supply.