Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.25 per fountain drink. Which of the following statements is correct? a. The price paid by buyers is $0.25 per drink more than it was before the tax. b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity. c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. d. Forty percent of the burden of the tax falls on buyers.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further,
suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.25 per fountain drink. Which of the
following statements is correct?
a. The price paid by buyers is $0.25 per drink more than it was before the tax.
b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity.
c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
d. Forty percent of the burden of the tax falls on buyers.
Transcribed Image Text:Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.25 per fountain drink. Which of the following statements is correct? a. The price paid by buyers is $0.25 per drink more than it was before the tax. b. This tax causes the supply curve for fountain drinks to shift downward by $0.50 at each quantity. c. This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. d. Forty percent of the burden of the tax falls on buyers.
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