Question

1.Eftect of a tax on buyers and sellers The following graph shows the daily market for shoes when the tax on sellers is set at $0 per Suppose the government Institutes a tax of $11.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, first enter the value of the tax in the Taxon Sellers field. Then line to the adjusting the value in the Price field.) move the green line to the after-tax equilibrium-so that quantity demanded equals quantity supplied-by Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly Graph Input Tool Market for Shoes Price $50 Dolars per pair) 5000 %artofsupplied 5000 Supply 70 (pairs of shoes) Supply Shifter 30 Tax on Sellers (Dollars per pair) 10 20345 0 TO O 90 100 QUANTITY (Pairs of shoes)
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Answer #1

Before Tax:

Quantity - 50 pairs of shoes

Equilibrium price - $ 50

After Tax:

Quantity - 45 pairs of shoes

Equilibrium price - $ 60

a) Equilibrium price increases by 60 - 50 = $ 10

b) Sellers pay 11.60 - 10 = $ 1.60

90 Supply 10 20 344 0 T0 90 100 OUANTITY (Pars of shoes》

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