3. Now, after much protesting from ice cream buyers, the government changes the tax, and requires sellers to pay the tax, rather than buyers. a. Draw a new diagram for the ice cream market showing this new tax. On your diagram, indicate the tax per gallon, the price paid by consumers, the price received by producers, and the quantity of ice cream sold. NOTE: YOU DO NOT NEED TO CALCULATE ANY SPECIFIC VALUES. SIMPLY INDICATE THESE ITEMS ON YOUR DIAGRAM (WHERE THEY WOULD BE IN RELATION TO EACH OTHER).
3. Now, after much protesting from ice cream buyers, the government changes the tax, and requires sellers to pay the tax, rather than buyers. a. Draw a new diagram for the ice cream market showing this new tax. On your diagram, indicate the tax per gallon, the price paid by consumers, the price received by producers, and the quantity of ice cream sold. NOTE: YOU DO NOT NEED TO CALCULATE ANY SPECIFIC VALUES. SIMPLY INDICATE THESE ITEMS ON YOUR DIAGRAM (WHERE THEY WOULD BE IN RELATION TO EACH OTHER).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
- Currently, the market
price for a gallon of ice cream is $5. - Now, suppose the federal government requires buyers of ice cream to pay a $2 tax on each
gallon of ice cream sold
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