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he following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $11.60 per bag. he tax places a wedge between the price buyers pay and the price sellers receive. 50 45 PRICE (Dollars per bag) 5 20 40 35 30 Tax Wedge 25 10 10 Supply 5 Demand 0 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) omplete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax sing your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity f demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Buyers Sellers Tax Burden (Dollars per bag) Elasticity he tax burden falls more heavily on the side of the market that is ▾ elastic.

he following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $11.60 per bag. he tax places a wedge between the price buyers pay and the price sellers receive. 50 45 PRICE (Dollars per bag) 5 20 40 35 30 Tax Wedge 25 10 10 Supply 5 Demand 0 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) omplete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax sing your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity f demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Buyers Sellers Tax Burden (Dollars per bag) Elasticity he tax burden falls more heavily on the side of the market that is ▾ elastic.

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
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3. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $11.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 50 45 40 35 Supply 30 Tax Wedge 25 20 15 10 5 Demand 0 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax Using your answers from 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. Buyers Sellers Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market that is elastic.
Transcribed Image Text:3. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $11.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 50 45 40 35 Supply 30 Tax Wedge 25 20 15 10 5 Demand 0 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax Using your answers from 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. Buyers Sellers Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market that is elastic.
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