7. Effect of a tax on buyers and sellers The following graph shows the daily market...

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7. Effect of a tax on buyers and sellers The following graph shows the daily market for jeans. Suppose the government institu

Demand Supply PRICE (Dollars per pair Tax Wedge 0 50 100 150 200 250 300 350 QUANTITY (Pairs of jeans) 400 450 500

Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the

business economics

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Answer 1

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Answer #1

	Quantity( pair of jeans)	price($) buyer pays	price ($)seller gets
Before tax	250	100	100
After tax	200	100•60	60

Tax burden

Buyer. 0•60$. Elastic

Seller. 4$. Inelastic

The burden of the tax falls more heavily on the Inelastic sideside of the market.

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Answer 2

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