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29 Sep 2019
5. Calculating tax incidence
Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 40 billion cases of cola were sold every year at $4 per case. After the tax, 35 billion cases of cola are sold every year; consumers pay $6 per case (including the tax), and producers receive $3 per case.
The amount of the tax on a case of cola is___per case. Of this amount, the burden that falls on consumers is___ per case, and the burden that falls on producers is ___ per case.
True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.
5. Calculating tax incidence
Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 40 billion cases of cola were sold every year at $4 per case. After the tax, 35 billion cases of cola are sold every year; consumers pay $6 per case (including the tax), and producers receive $3 per case.
The amount of the tax on a case of cola is___per case. Of this amount, the burden that falls on consumers is___ per case, and the burden that falls on producers is ___ per case.
True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.
Chika IlonahLv10
29 Sep 2019
