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19.02.2021 • 
Business

6. Calculating tax incidence Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 20,000 cases of cola were sold every week at a price of $4 per case. After the tax, 13,000 cases of cola are sold every week; consumers pay $7 per case, and producers receive $2 per case (after paying the tax). The amount of the tax on a case of cola isper case. Of this amount, the burden that falls on consumers isper case, and the burden that falls on producers isper case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True False

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