9. Effect of a tax on buyers and sellersThe following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle.Suppose the government institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the taxin the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Taxon Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.)Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.200PRICE (Dollars per bottle)160Supply1401201001480Demand604020010 20 30 40 50 60 70 80 90 100QUANTITY (Bottles of wine)1800Before TaxAfter TaxGraph Input ToolMarket for WineBuyersSellersQuantity(Bottles of wine)Tax Burden(Dollars per bottle) ElasticityDemand Price(Dollars per bottle)10Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers Pay(Bottles of wine) (Dollars per bottle)Price Sellers Receive(Dollars per bottle)132.00The burden of the tax falls more heavily on the elastic side of the market.Supply Price(Dollars per bottle)Supply ShifterTax on Sellers(Dollars per bottle)?Using the data you entered in the previous table, calculate the tax burden that falls on buyers and sellers, respectively, and calculate the priceelasticity of demand and supply throughout the relevant ranges using the midpoint method. Enter your results in the following table.0.000.00

When the government imposed the taxes, the price that the buyer pays must be more than the price…

The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $40.60 per bottle. to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle. Suppose the government institutes a tax of $40.60 per bottle. to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer the given question with a proper explanation and step-by-step solution.