Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 200 180 160 140 120 100 40 20 0 Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) 100 132.00 Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 0.00 0.00

Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 200 180 160 140 120 100 40 20 0 Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) 100 132.00 Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 0.00 0.00

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 20RQ: What is indexing?

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