The graph shows the market for smartphone chargers. Draw a point to show the price of a smartphone charger and the quantity bought and sold. Label it 1. The government imposes a tax of $4 per smartphone charger on buyers. Draw the D-tax curve and label it. Draw a point to show the price paid by buyers and the quantity bought and sold with the tax. Label it 2. Draw a point to indicate the price received by sellers and the quantity bought and sold with the tax. Label it 3. The tax is OA. split between the buyers and sellers, and the sellers pay more than the buyers

The graph shows the market for smartphone chargers. Draw a point to show the price of a smartphone charger and the quantity bought and sold. Label it 1. The government imposes a tax of $4 per smartphone charger on buyers. Draw the D-tax curve and label it. Draw a point to show the price paid by buyers and the quantity bought and sold with the tax. Label it 2. Draw a point to indicate the price received by sellers and the quantity bought and sold with the tax. Label it 3. The tax is OA. split between the buyers and sellers, and the sellers pay more than the buyers

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter17: Taxation And Resource Allocation

Section: Chapter Questions

Problem 2DQ

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Taxation Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (a) Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? (b) Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased?
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