Before tax,
Quantity was 500, price buyers pay was $25 and price sellers received was $25.
After tax,
Quantity was 400, price buyers pay was 35 and price sellers receive was 23.4.
Tax burden
Buyers = 35-25 =10
Sellers = 1.6
Buyer's elasticity was less and seller's more.
The tax burden falls more heavily on the less elastic side of the market.
6. Effect of a tax on buyers and sellers The following graph shows the daily market...
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The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity...
The following graph shows the daily market for shoes. Suppose the government institutes a tax of $11.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity...
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