ck to Assignment Attempts Do No Harm /2 5. Calculating tax incidence Suppose that the U:S. government decides to charge wine consumers a tax. Before the tax, 50 million bottles of wine were sold every month at a price of $4 per bottle. After the tax, 45 million bottles of wine are sold every month; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the The amount of the tax on a bottle of wine is $ burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. True

ck to Assignment Attempts Do No Harm /2 5. Calculating tax incidence Suppose that the U:S. government decides to charge wine consumers a tax. Before the tax, 50 million bottles of wine were sold every month at a price of $4 per bottle. After the tax, 45 million bottles of wine are sold every month; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the The amount of the tax on a bottle of wine is $ burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. True

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 50CTQ: Explain why voluntary Martians improve social welfare.

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New York State imposes some of the highest "sin tax" rates in the country. When I say "sin tax", I'm referring to excise taxes on items such as cigarettes, tobacco, fuel and liquor. Some claim the high taxes on these products helps reduce demand. Does the high excise tax rates on these products actually reduce demand for these products? Do the taxes encourage illegal behavior? It's estimated that more than 50% of all cigarette sales in NYS are made illegally. Would reducing or eliminating these taxes actually bring in more revenue to the State than if the taxes remain high?
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