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he following graph shows the daily market for shoes. Suppose the government institutes a tax of $40.60 per pair. This places a wedge between the rice buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) PRICE (Dollars per pair)

he following graph shows the daily market for shoes. Suppose the government institutes a tax of $40.60 per pair. This places a wedge between the rice buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) PRICE (Dollars per pair)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following graph shows the daily market for shoes. Suppose the government institutes a tax of $40.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 + 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) PRICE (Dollars per pair)
Transcribed Image Text:The following graph shows the daily market for shoes. Suppose the government institutes a tax of $40.60 per pair. This places a wedge between the price buyers pay and the price sellers receive. 200 180 160 Demand Supply 140 120 100 Tax Wedge 80 60 40 20 + 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) PRICE (Dollars per pair)
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 Price Sellers Receive (Pairs of shoes) (Dollars per pair) (Dollars per pair) 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 (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market.
Transcribed Image Text: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 Price Sellers Receive (Pairs of shoes) (Dollars per pair) (Dollars per pair) 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 (Dollars per pair) Elasticity Buyers Sellers The burden of the tax falls more heavily on the elastic side of the market.
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