7. Effect of a tax on buyers and sellers Part 3The following graph shows the daily market for jeans. Suppose the government institutes a tax of $20.30 per pair. This places a wedge between the price buyers pay and the price sellers receive. 1009080DemandSupply706050Тах Wedge40302010100200300400500G00700800900 1000QUANTITY (Pairs of jeans)Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers PayPrice Sellers Receive(Pairs of jeans) (Dollars per pair)(Dollars per pair)Before TaxAfterТаxUsing the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the priceelasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.Tax Burden(Dollars per pair)ElasticityBuyersSellersThe burden of the tax falls more heavily on theelastic side of the market.PRICE (Dollars per pair)

Introduction: Elasticity is a measure of a variable's sensitivity to a change in another variable;…

Answered: The following graph shows the daily…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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7. Effect of a tax on buyers and sellers Part 3

The following graph shows the daily market for jeans. Suppose the government institutes a tax of $20.30 per pair. This places a wedge between the price buyers pay and the price sellers receive.

100
90
80
Demand
Supply
70
60
50
Тах Wedge
40
30
20
10
100
200
300
400
500
G00
700
800
900 1000
QUANTITY (Pairs of jeans)
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
Price Buyers Pay
Price Sellers Receive
(Pairs of jeans) (Dollars per pair)
(Dollars per pair)
Before Tax
After
Таx
Using the data you entered in the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price
elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.
Tax Burden
(Dollars per pair)
Elasticity
Buyers
Sellers
The burden of the tax falls more heavily on the
elastic side of the market.
PRICE (Dollars per pair)

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