u.robaid Q4LCOA801010000003ed8 1400 oad-m-1516635230, +, C) Apla: su entQuesti n × C The a out ofthe taxon a cas.. Goog Grades Reviews pply, Demand, and Government Policies (Mobile-Enabled) ed Assignment | Read Chapter & I Back to Assignment Due Sunday 01.28.18 at 11:45 ttempts: Keep the Highest: 12 5. Calculating tax incidence Suppose that the U.S. govemment decides to charge beer producers a tax. Before the tax, 25,000 cases of beer were sold every week at a price of $6 per case. After the tax, 20,000 cases of beer are sold every week; consumers pay $8 per case, and producers receive $5 per case (after paying the tax). T burden thst tlls an producers per case. of this amount, the burden that falls on consumers is per case. per case, and the The amount of the tax on a case of beer is 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. O True False Grade It Now Continue without saving Copyright NoticesTerms of UsePrivacy Notice up
Question 5
Price before tax is levied = $6 per case
Price consumers pay after tax = $8 per case
Price producers recieve after tax = $5 per case
Calculate the amount of tax -
Amount of tax = Price consumers pay after tax - Price producers recieve after tax
Amount of tax = $8 - $5 = $3
Burden on consumers = Price consumers pay after tax - Price before tax = $8 - $6 = $2
Burden of producers = Price before tax - Price producers recieve after tax = $6 - $5 = $1
Thus,
The amount of the tax on a case of beer is $3 per case. Of this amount, the burden that falls on consumers is $2 per case, and the burden that falls on producers is $1 per case.
The effect of the tax on the quantity sold remains same whether the tax is levied on consumers or producers.
Hence, the given statement is True.
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