6. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 10 million cases of cola were sold every month at a price of $4 per case. After the tax, 4 million cases of cola are sold every month; consumers pay $7 per case (including the tax), and producers receive $1 per case. The amount of the tax on a case of cola is s per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is s per case. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. True O False

6. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 10 million cases of cola were sold every month at a price of $4 per case. After the tax, 4 million cases of cola are sold every month; consumers pay $7 per case (including the tax), and producers receive $1 per case. The amount of the tax on a case of cola is s per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is s per case. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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