5. Calculating tax incidence Suppose that the U.S. government decides to charge beer producers a tax. Before the tax, 10
Posted: Wed Jul 06, 2022 6:21 am
5. Calculating tax incidence
Suppose that the U.S. government decides to charge beerproducers a tax. Before the tax, 10,000 cases of beer were soldevery week at a price of $5 per case. After the tax, 5,000 cases ofbeer are sold every week; consumers pay $7 per case, and producersreceive $4 per case (after paying the tax).
The amount of the tax on a case of beer is$_____ per case. Of this amount, the burden thatfalls on consumers is $_____ per case, and theburden that falls on producers is $_____ percase.
True or False: The effect of the tax on the quantity sold wouldhave been the same as if the tax had been levied on consumers.
True
False
Suppose that the U.S. government decides to charge beerproducers a tax. Before the tax, 10,000 cases of beer were soldevery week at a price of $5 per case. After the tax, 5,000 cases ofbeer are sold every week; consumers pay $7 per case, and producersreceive $4 per case (after paying the tax).
The amount of the tax on a case of beer is$_____ per case. Of this amount, the burden thatfalls on consumers is $_____ per case, and theburden that falls on producers is $_____ percase.
True or False: The effect of the tax on the quantity sold wouldhave been the same as if the tax had been levied on consumers.
True
False