PRICE (Dollars per bag) 82228888 200 100 100 140 120 40 20 0 Demand Tax Wedge Supply 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Bags of handbags)

Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Costs Of Taxation
Section: Chapter Questions
Problem 4CQQ
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Question
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Homework (Ch 06)
82222888
200
PRICE (Dollars per bag)
100
100
140
120
100
00
40
20
O
Demand
0
Tax Wedge
Supply
100 200 300 400 500 600 700 800 900 1000
QUANTITY (Bags of handbags)
21SITORS CODE
11:56 PM
Transcribed Image Text:Homework (Ch 06) 82222888 200 PRICE (Dollars per bag) 100 100 140 120 100 00 40 20 O Demand 0 Tax Wedge Supply 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Bags of handbags) 21SITORS CODE 11:56 PM
Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
(Bags of handbags)
Price Buyers Pay
(Dollars per bag)
Price Sellers Receive
(Dollars per bag)
Before Tax
After Tax
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 method. 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.
Transcribed Image Text:Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) Before Tax After Tax 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 method. 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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