Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 200 180 160 140 120 100 40 20 0 Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) 100 132.00 Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 0.00 0.00

Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on Sellers field. You should see a tax wedge between the price buyers pay and the price sellers receive.) Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per pair) 200 180 160 140 120 100 40 20 0 Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) 100 132.00 Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 0.00 0.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

macro question 8

8. Effect of a tax on buyers and sellers
The following graph shows the daily market for shoes when a tax on sellers is set at $0 per pair.
Suppose the government institutes a tax of $40.60 per pair, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in
the Tax on Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then enter zero in the Tax on
Sellers field. Vou should see a tax wedge between the price buyers pay and the price sellers receive.)
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
Graph Input Tool
Market for Shoes
200
I Quantity
(Pairs of shoes)
100
180
Sup ply
Demand Price
(Dollars per pair)
Supply Price
(Dollars per pair)
160
132.00
0.00
140
Supply Shifter
120
Tax on Sellers
(Dollars per pair)
100
0.00
80
Demand
60
40
20
O 100 200 300 400 s00 600 700 B00 900 1000
QUANTITY (Pairs of shoes)
PRICE(Dollars per pair)

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