The following graph shows the daily market for shoes. Supposethe government institutes a tax of $11.60 per pair. This places awedge between the price buyers pay and the price sellersreceive.
- 7 Effect Of A Tax On Buyers And Sellers The Following Graph Shows The Daily Market For Shoes Suppose The Government In 1 (16.19 KiB) Viewed 6 times
Quantity
Price Buyers Pay
Price Sellers Receive
(Pairs of shoes)
(Dollars per pair)
(Dollars per pair)
Using the data you entered in the previous table, calculate thetax burden that falls on buyers and on sellers, respectively, andcalculate the price elasticity of demand and supply over therelevant ranges using the midpoint method. Enter your results inthe following table.
Tax Burden
Elasticity
(Dollars per pair)
The burden of the tax falls more heavily on the less ormore elastic side of the market.
PRICE (Dollars per pair) 50 45 40 35 30 25 20 15 10 10 5 0 Cả 0 50 Tax Wedge + 100 Supply Demand 150 200 250 300 350 QUANTITY (Pairs of shoes) 400 450 500