Question

10 Demand Supply Scratch points CO 0 1 23 5678910 Quantity of Beer (Thousands of cases)

4. Problems and Applications Q4 Use the following graph of the market for cases of beer to answer the questions that follow. (Note: You will not be graded on any changes you make to the graph.) Price of Beer (Dollars per case)Quantity of Beer (Thousands of cases)DemandSupply Complete the first row of the following table by entering the price paid by consumers, the price received by producers, and the quantity of beer sold in the absence of a tax on this market. Tax Price Paid by Consumers Price Received by Producers Quantity of Beer Sold (Dollars per case) (Dollars per case) (Dollars per case) (Thousands of cases) 0 4 Suppose the federal government requires beer drinkers to pay a $4 tax on each case of beer purchased. (In fact, both the federal and state governments impose beer taxes of some sort.) Complete the second row of the above table by entering the price paid by consumers, the price received by producers, and the quantity of beer sold when beer drinkers pay a $4 tax on each case of beer. True or False: The difference between the price paid by consumers and the price received by producers remains unchanged. True False

Answer 1

False

Explanation: without tax, the price paid by consumers and price received by seller are both equal to $5. whereas in the presence of tax t= $4, the price paid by the consumer is $7 and price received by seller is $3.

when tax (t = 0), the equilibrium between demand and supply gives price = $5 and quantity = 5. we get this from the point when demand and supply curves intersect each other.

Tar (Deuou.pn. | ל Crwan Adl 법poduen | bende Case 2 1