3. Calculating tax incidence Suppose that the local government of Tulsa decides to institute a tax on soda consumers. Before the tax, 30 million liters of soda were sold every month at a price of $9 per liter. After the tax, 23 million liters of soda are sold every month; consumers pay $12 per liter (including the tax), and producers receive $6 per liter. The amount of the tax on a liter of soda is S that falls on producers is 5 per liter. Of this amount, the burden that falls on consumers is 5 per liter, and the burden per liter True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers, O True False Grade It Now Save & Continue
3. Calculating tax incidence Suppose that the local government of Tulsa decides to institute a tax on soda consumers. Before the tax, 30 million liters of soda were sold every month at a price of $9 per liter. After the tax, 23 million liters of soda are sold every month; consumers pay $12 per liter (including the tax), and producers receive $6 per liter. The amount of the tax on a liter of soda is S that falls on producers is 5 per liter. Of this amount, the burden that falls on consumers is 5 per liter, and the burden per liter True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers, O True False Grade It Now Save & Continue
Chapter1: Making Economics Decisions
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Transcribed Image Text:3. Calculating tax incidence
Suppose that the local government of Tulsa decides to institute a tax on soda consumers. Before the tax, 30 million liters of soda were sold every
month at a price of $9 per liter. After the tax, 23 million liters of soda are sold every month; consumers pay $12 per liter (including the tax), and
producers receive $6 per liter.
The amount of the tax on a liter of soda is S
that falls on producers is 5
per liter. Of this amount, the burden that falls on consumers is 5
per liter, and the burden
per liter
True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers,
O True
False
Grade It Now
Save & Continue
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