3. Effect of a tax on buyers and sellersThe following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between theprice buyers pay and the price sellers receive.200180160DemandSupply140120100Tax Wedge8060402050100150200250 300350400450500QUANTITY (Bottles of wine)PRICE (Dollars per bottle) Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers PayPrice Sellers Receive(Bottles of wine)(Dollars per bottle)(Dollars per bottle)Before TaxAfter TaxUsing the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the priceelasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.Tax Burden(Dollars per bottle)ElasticityBuyersSellersThe burden of the tax falls more heavily on the v elastic side of the market.

Answered: Image /qna-images/answer/5bbc1134-2a93-4a82-b42e-5e906e063695.jpg

The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bottles of wine) PRICE (Dollars per bottle)

The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bottles of wine) PRICE (Dollars per bottle)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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