5. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 35 million cases of cola were sold every month at a price of $6 per case. After the tax, 29 million cases of cola are sold every month; consumers pay $7 per case (including the tax), and producers receive $3 per case. The amount of the tax on a case of cola is $ per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. O True O False
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 35 million cases of cola were sold every month at a price of $6 per case. After the tax, 29 million cases of cola are sold every month; consumers pay $7 per case (including the tax), and producers receive $3 per case. The amount of the tax on a case of cola is $ per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. O True O False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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