Answer Happy

7. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes. 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. 200 180 160 Supply 140 120 Tax Wedge 100 4 80 60 40 20 Demand 0 0 50 100 200 250 300 350 400 450 500 150 QUANTITY (Pairs of shoes) PRICE (Dollars per pair)
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Pairs of shoes) Price Buyers Pay (Dollars per pair) Price Sellers Receive (Dollars per pair) Before Tax After Tax 1.04 Using the data you entered in the pre elasticity of demand and supply over 2.63 ble, 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. 0.52 Tax Burden 1.92 (Dollars per pair) El Buyers Sellers The burden of the tax falls more heavily on the more elastic side of the market. alique