Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 35,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 29,000 bottles of wine are sold every week; consumers pay $5 per bottle, and producers receive $1 per bottle (after paying the tax). The amount of the tax on a bottle of wine is $ per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. 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. True False

Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 35,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 29,000 bottles of wine are sold every week; consumers pay $5 per bottle, and producers receive $1 per bottle (after paying the tax). The amount of the tax on a bottle of wine is $ per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. 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. True False

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section6.2: Taxes

Problem 2QQ

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