Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30,000 cases of cola were sold every week at a price of $6 per case. After the tax, 23,000 cases of cola are sold every week; consumers pay $9 per case, and producers receive $4 per case (after paying the tax). The amount of the tax on a case of cola isper case. Of this amount, the burden that falls on consumers isper case, and the burden that falls on producers isper case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True False

Suppose that the U.S. government decides to charge cola producers a tax. Before the tax, 30,000 cases of cola were sold every week at a price of $6 per case. After the tax, 23,000 cases of cola are sold every week; consumers pay $9 per case, and producers receive $4 per case (after paying the tax). The amount of the tax on a case of cola isper case. Of this amount, the burden that falls on consumers isper case, and the burden that falls on producers isper case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True False

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 4QP

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