Suppose that the local government of Corpus Christi decides to institute a tax on soda consumers. Before the tax, 40,000 liters of soda were sold every week at a price of $9 per liter. After the tax, 33,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $5 per liter. The amount of the tax on a liter of soda is that falls on producers is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden per liter. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. True O False

Suppose that the local government of Corpus Christi decides to institute a tax on soda consumers. Before the tax, 40,000 liters of soda were sold every week at a price of $9 per liter. After the tax, 33,000 liters of soda are sold every week; consumers pay $14 per liter (including the tax), and producers receive $5 per liter. The amount of the tax on a liter of soda is that falls on producers is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden per liter. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. True O False

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 3TY

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