. Calculating tax incidence Suppose that the U.S. government decides to charge wine producers a tax....

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. Calculating tax incidence Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 50 milli

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Answer 1

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The amount of the tax on a bottle of wine is $(7 - 3) = $4 per bottle. Of this amount, the burden that falls on Consumers is $(7 - 6) = $1 per bottle, and the burden that falls on producers is $(6 - 3) = $3 per bottle.

No matter on which side the tax is imposed, effect of the tax on the quantity sold will be the same. So the given statement is False.

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Answer 2

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