Suppose a local government imposes a tax on sales of firewood. Before the tax, 20,000 bundles were sold at an average price of $6 per bundle. With the tax in effect, 16,000 bundles are sold, buyers pay $6.40 per pack, and sellers receive $5.50 per pack. In this scenario, the tax is $____ per pack, the tax incidence that falls on buyers is $______ per pack, and the tax incidence that falls on sellers is $______ per pack.
Suppose a local government imposes a tax on sales of firewood. Before the tax, 20,000 bundles were sold at an average price of $6 per bundle. With the tax in effect, 16,000 bundles are sold, buyers pay $6.40 per pack, and sellers receive $5.50 per pack. In this scenario, the tax is $____ per pack, the tax incidence that falls on buyers is $______ per pack, and the tax incidence that falls on sellers is $______ per pack.
Chapter16: The Public Sector
Section: Chapter Questions
Problem 17SQ
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Suppose a local government imposes a tax on sales of firewood. Before the tax, 20,000 bundles were sold at an average
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