Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of 55 per bottle. After the tax, 28 billion bottles of wine are sold every year; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. The amount of the tax on a bottle of wine is S per bottle. Of this amount, the burden that falls on consumers is per bottle, and the burden that falls on producers is S per bottle. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. O True O False
Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of 55 per bottle. After the tax, 28 billion bottles of wine are sold every year; consumers pay $6 per bottle (including the tax), and producers receive $3 per bottle. The amount of the tax on a bottle of wine is S per bottle. Of this amount, the burden that falls on consumers is per bottle, and the burden that falls on producers is S per bottle. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers. O True O False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of
$5 per bottle. After the tax, 28 billion bottles of wine are sold every year; consumers pay $6 per bottle (including the tax), and producers receive $3
per bottle.
The amount of the tax on a bottle of wine is S
burden that falls on producers is S
|per bottle. Of this amount, the burden that falls on consumers is S
per bottle, and the
per bottle.
True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.
True
O False](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faa00ebaa-23b9-4b28-a7ce-1aeaaf3b9d34%2Ffdee8643-61ae-44ac-8634-8fa6eb43f603%2Ftuf8p0e_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 35 billion bottles of wine were sold every year at a price of
$5 per bottle. After the tax, 28 billion bottles of wine are sold every year; consumers pay $6 per bottle (including the tax), and producers receive $3
per bottle.
The amount of the tax on a bottle of wine is S
burden that falls on producers is S
|per bottle. Of this amount, the burden that falls on consumers is S
per bottle, and the
per bottle.
True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.
True
O False
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