7. Effect of a tax on buyers and sellersThe following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between theprice buyers pay and the price sellers receive.200180160DemandSupply140120100Tax Wedge60402010020000400 500B0000 100000QUANTITY (Botles of wine)PRICE (Dolars per bottle) Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers Pay(Bottles of wine) (Dollars per bottle)Price Sellers Receive(Dollars per bettle)Before TaxAfter TaxUsing the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the priceelasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following tableTax Burden(Dellars per bottie) ElasticityBuyersSellersThe burden of the tax falis more heavily on theelastic side of the market.

To find exects values on the given supply and demand curve, we will find the demand and supply…

Fl an the following tabie with the quantty sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Bottles of wine) (Dollars per bottle) (Dollars per bottle) Before Tax After Tax Using the data you entered in 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 method Enter your results in the following table Tax Burden (Dellars per bottie) Elasticity Buyers Sellers The burden of the tax falis more heavily on the elastic side of the market

Fl an the following tabie with the quantty sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Bottles of wine) (Dollars per bottle) (Dollars per bottle) Before Tax After Tax Using the data you entered in 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 method Enter your results in the following table Tax Burden (Dellars per bottie) Elasticity Buyers Sellers The burden of the tax falis more heavily on the elastic side of the market

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

7. Effect of a tax on buyers and sellers
The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the
price buyers pay and the price sellers receive.
200
180
160
Demand
Supply
140
120
100
Tax Wedge
60
40
20
100
200
00
400 500
B00
00 1000
00
QUANTITY (Botles of wine)
PRICE (Dolars per bottle)

Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
Price Buyers Pay
(Bottles of wine) (Dollars per bottle)
Price Sellers Receive
(Dollars per bettle)
Before Tax
After Tax
Using the data you entered in 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 method. Enter your results in the following table
Tax Burden
(Dellars per bottie) Elasticity
Buyers
Sellers
The burden of the tax falis more heavily on the
elastic side of the market.

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