7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $20.30 per pair. This places a wedge between the price buyers pay and the price sellers receive. 100 90 80 Demand Supply 70 50, 50 60 Тая Wedye 40 30 20 10 30 40 50 QUANTITY (Pairs of jearn) 10 20 70 90 100 Fill in the following table with the quantity sold, the price buyers pay, and the price selers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Таx Burden (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market. PRICE (Dolars per pair)

7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institutes a tax of $20.30 per pair. This places a wedge between the price buyers pay and the price sellers receive. 100 90 80 Demand Supply 70 50, 50 60 Тая Wedye 40 30 20 10 30 40 50 QUANTITY (Pairs of jearn) 10 20 70 90 100 Fill in the following table with the quantity sold, the price buyers pay, and the price selers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Pairs of jeans) (Dollars per pair) (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Таx Burden (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market. PRICE (Dolars per pair)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 6CQQ

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