The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag.The tax places a wedge between the price buyers pay and the price sellers receive.PRICE (Dollars per bag)882938288 8 8 8 8 818010014012010020DemandTax WedgeSupply100 150 200 200 300 350 400 450 500QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.Price Buyers Pay(Dollars per bag)Price Sellers Receive(Dollars per bag)Before TaxAfter TaxQuantity(Bags of handbags)Using 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 máthod. 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

Demand :Demand is when a consumer has the desire to buy something at the price that he is ready to…

Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Price Sellers Receive (Dollars per bag) Before Tax After Tax Quantity (Bags of handbags) Buyers Sellers Price Buyers Pay (Dollars per bag) Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint máthod. Enter your results in the following table Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market that is elastic.

Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Price Sellers Receive (Dollars per bag) Before Tax After Tax Quantity (Bags of handbags) Buyers Sellers Price Buyers Pay (Dollars per bag) Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint máthod. Enter your results in the following table Tax Burden (Dollars per bag) Elasticity The tax burden falls more heavily on the side of the market that is elastic.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 30CTQ: In a market where the supply curve is perfectly inelastic how does an excise tax affect the price...

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Question

The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $40.60 per bag.
The tax places a wedge between the price buyers pay and the price sellers receive.
PRICE (Dollars per bag)
88293828
8 8 8 8 8 8
180
100
140
120
100
20
Demand
Tax Wedge
Supply
100 150 200 200 300 350 400 450 500
QUANTITY (Bags of handbags)

Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Price Buyers Pay
(Dollars per bag)
Price Sellers Receive
(Dollars per bag)
Before Tax
After Tax
Quantity
(Bags of handbags)
Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity
of demand and supply over the relevant ranges using the midpoint máthod. Enter your results in the following table
Buyers
Sellers
Tax Burden
(Dollars per bag) Elasticity
The tax burden falls more heavily on the side of the market that is
elastic

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