5. Calculating tax incidence Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 30,000 bottles of wine were sold every week at a price of $6 per bottle. After the tax, 23,000 bottles of wine are sold every week; consumers pay $9 per bottle (including the tax), and producers receive $4 per bottle. 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 smaller if the tax had been levied on producers. O True

5. Calculating tax incidence Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 30,000 bottles of wine were sold every week at a price of $6 per bottle. After the tax, 23,000 bottles of wine are sold every week; consumers pay $9 per bottle (including the tax), and producers receive $4 per bottle. 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 smaller if the tax had been levied on producers. O True

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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