Calculating tax incidence Suppose that the local government of Jacksonville decides to institute a tax on soda producers. Before the tax, 40 billion liters of soda were sold every year at a price of $10 per liter. After the tax, 33 billion liters of soda are sold every year; consumers pay $12 per liter, and producers receive $7 per liter (after paying the tax). The amount of the tax on a liter of soda is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden that falls on producers is per liter. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been

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A:

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