Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers Pay Price Sellers Receive(Bags of handbags) (Dollars per bag) (Dollars per bag)Before TaxAfter TaxUsing your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticityof demand and supply over the relevant ranges using the midpoint method. Enter your results in the following tableBuyersSellersTax Burden(Dollars per bag) ElasticityThe tax burden falls more heavily on the side of the market that iselastic 7. Effect of a tax on buyers and sellersThe following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $46.40 per bag.The tax places a wedge between the price buyers pay and the price sellers receive.PRICE (Dollars per bag)200823953 2 2 2 2160100140120100o0 50Tax WedgeSupplyDemand100 150 200 250 300 350 400 450 500QUANTITY (Bags of handbags)?

A tax is implemented by the government that are to be paid by the consumers over the market price…

7. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $46.40 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 8 29 32 2. 160 100 140 120 100 40 20 o O 50 Tax Wedge Supply Demand 100 150 200 250 30000 400 450 500 QUANTITY (Bags of handbags) ?

7. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $46.40 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per bag) 200 8 29 32 2. 160 100 140 120 100 40 20 o O 50 Tax Wedge Supply Demand 100 150 200 250 30000 400 450 500 QUANTITY (Bags of handbags) ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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