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The following graph shows the daily market for jeans. Suppose the government institutes a tax of $46.40 per pair. This places a wedge between the price buyers pay and the price sellers receive. 200 100 100 Supply 140 120 100 DO PRICE (Dollars per pair) 60 40 20 0 0 50 Tax Wedge Demand 150 200 250 300 350 400 450 500 QUANTITY (Pairs of jeans) 100 a
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Pairs of jeans) (Dollars per pair) Price Sellers Receive (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market.
Quantity (Pairs of jeans) Price Buyers Pay (Dollars per pair) Price Sellers Receive (Dollars per pair) Before Tax After Tax 0.52 Using the data you entered in the pre elasticity of demand and supply over ple, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price ant ranges using the midpoint method. Enter your results in the following table. 0.38 Tax Burden 1.32 (Dollars per pair) Ela 2.63 Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market.
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Pairs of jeans) (Dollars per pair) Price Sellers Receive (Dollars per pair) Before Tax After Tax Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table. Tax Burden (Dollars per pair) Elasticity Buyers less Sellers more The burden of the tax falls more heavily on the elastic side of the market.