Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case.

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Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case.

Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case. After the tax, 18,000 cases of cola are sold every week; consumers pay $6 per case (including the tax), and producers receive $3 per case.

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 producers.

business economics

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Answer 1

Answer #1

Amount of tax= 6-3= 3

Burden that falls on consumers = 6-5= 1 per case

Burden that falls on producers = 6-3= 2 per case

False- the incidence of tax does not depend on whom it is levied.

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Answer 2

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Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case.

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Add Answer to: Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case.

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Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25,000 cases of cola were sold every week at a price of $5 per case.