8. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when a tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. Vou should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Shoes 200 I Quantity (Pairs of shoes) 100 180 Sup ply Demand Price (Dolars per pair) Supply Price (Dollars per pair) 160 132.00 0.00 140 Supply Shifter 120 100 Tax on Sellers (Dolars per pair) 0.00 80 Demand 60 40 20 O 100 200 300 400 s00 G00 700 B00 900 1000 QUANTITY (Pairs of shoes) PRICE(Dollars per pair)
8. Effect of a tax on buyers and sellers The following graph shows the daily market for shoes when a tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. Vou should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Shoes 200 I Quantity (Pairs of shoes) 100 180 Sup ply Demand Price (Dolars per pair) Supply Price (Dollars per pair) 160 132.00 0.00 140 Supply Shifter 120 100 Tax on Sellers (Dolars per pair) 0.00 80 Demand 60 40 20 O 100 200 300 400 s00 G00 700 B00 900 1000 QUANTITY (Pairs of shoes) PRICE(Dollars per pair)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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macroeconmics question 8
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