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Suppose that the U.S. government decides to charge beer producers a tax. Before the tax, 15 million cases of beer were sold every month at the price of $4 per case. After the tax, 8 million cases of beer are sold every month; consumers pay $5 per case, and producers receive $2 per case (after paying the tax). Calculate the deadweight loss due to tax.

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Related questions

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.

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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, 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 wine producers a tax. Before the tax, 20,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 13,000 bottles of wine are sold every week; consumers pay $5 per bottle, and producers receive $2 per bottle (after paying the tax).

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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 consumers.

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