Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax). The amount of the tax on a case of cola is |per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is s per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O True O False
Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax). The amount of the tax on a case of cola is |per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is s per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O True O False
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter5: Elasticity
Section: Chapter Questions
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5. Calculating tax incidence
Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $4 per case. After the tax, 4,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $1 per case (after paying the tax).
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