Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 35,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 29,000 bottles of wine are sold every week; consumers pay $5 per bottle, and producers receive $1 per bottle (after paying the tax). The amount of the tax on a bottle of wine is $ per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on consumers. True False

Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 35,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 29,000 bottles of wine are sold every week; consumers pay $5 per bottle, and producers receive $1 per bottle (after paying the tax). The amount of the tax on a bottle of wine is $ per bottle. Of this amount, the burden that falls on consumers is $ per bottle, and the burden that falls on producers is $ per bottle. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on consumers. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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macro question 6
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