ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 20, Problem 2RQ
To determine
The marginal and average tax rate.
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Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30 billion cases of cola were sold every year at a price of $4 per case. After the tax, 23 billion cases of cola are sold every year; consumers pay $5 per case, and producers receive $2 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 $__________ 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.
Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 35 billion cases of beer were sold every year at a price of $6 per case. After the tax, 28 billion cases of beer are sold every year; consumers pay $7 per case (including the tax), and producers receive $4 per case.
The amount of the tax on a case of beer is $ _________ per case. Of this amount, the burden that falls on consumers is $_________ per case, and the burden that falls on producers is $___________per case.
True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers.
True
False
Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 15 million bottles of wine were sold every month at a price of $7 per bottle. After the tax, 9 million bottles of wine are sold every month; consumers pay $10 per bottle (including the tax), and producers receive $4 per bottle.
The amount of the tax on a bottle of wine is $_______ per bottle. Of this amount, the burden that falls on consumers is $________per bottle, and the burden that falls on producers is $_______per bottle.
Chapter 20 Solutions
ECONOMICS W/CONNECT+20 >C<
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