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28 Sep 2019
5. Calculating tax incidence. Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $5 per case. After the tax, 3,000 cases of cola are sold every week; consumers pay $8 per case (including the tax), and producers receive $3 per case.
1) The amount of the tax on a case of cola is $??? per case.
2) Of this amount, the burden that falls on consumers is $??? per case, and the burden that falls on producers is $??? per case.
3) True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True/ False
5. Calculating tax incidence. Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 10,000 cases of cola were sold every week at a price of $5 per case. After the tax, 3,000 cases of cola are sold every week; consumers pay $8 per case (including the tax), and producers receive $3 per case.
1) The amount of the tax on a case of cola is $??? per case.
2) Of this amount, the burden that falls on consumers is $??? per case, and the burden that falls on producers is $??? per case.
3) True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True/ False
Joshua StredderLv10
28 Sep 2019
