The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $5.80 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) 35 30 25 20 15 10 5 0 Demand Before Tax After Tax 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of shoes) S+ Tax Buyers Sellers Supply 50 46 Quantity (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) Price Buyers Pay (Dollars per pair) 25.00 25.00 Tax Burden (Dollars per pair) Elasticity 50 25.00 Supply Price Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) Price Sellers Receive (Dollars per pair) 25.00 30.80 30.80 5.80 Using the data you entered in the previous table, calculate the tax burden that falls on buyers and 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. The burden of the tax falls more heavily on the elastic side of the market. ?
The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair. Suppose the government institutes a tax of $5.80 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) 35 30 25 20 15 10 5 0 Demand Before Tax After Tax 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Pairs of shoes) S+ Tax Buyers Sellers Supply 50 46 Quantity (Pairs of shoes) Graph Input Tool Market for Shoes Quantity (Pairs of shoes) Demand Price (Dollars per pair) Price Buyers Pay (Dollars per pair) 25.00 25.00 Tax Burden (Dollars per pair) Elasticity 50 25.00 Supply Price Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) Price Sellers Receive (Dollars per pair) 25.00 30.80 30.80 5.80 Using the data you entered in the previous table, calculate the tax burden that falls on buyers and 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. The burden of the tax falls more heavily on the elastic side of the market. ?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Not sure if what I have so far is correct and confused on how to solve the rest
Transcribed Image Text:The following graph shows the daily market for shoes when the tax on sellers is set at $0 per pair.
Suppose the government institutes a tax of $5.80 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.
S + Tax
Quantity
(Pairs of
Supply
shoes)
HIP
Demand
Price
(Dollars per
pair)
Demand
PRICE (Dollars per pair)
50
45
40
35
30
25
20
15
10
0
0 10
10 20 30 40 50 60 70 80 90 100
QUANTITY (Pairs of shoes)
Before Tax
After
Tax
Quantity
(Pairs of shoes)
Buyers
Sellers
Graph Input Tool
50
46
Market for Shoes
Price Buyers Pay
(Dollars per pair)
25.00
25.00
Tax Burden
(Dollars per pair) Elasticity
50
25.00
Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive
before and after the tax.
Supply
Price
(Dollars per
pair)
Supply Shifter
Tax on
Sellers
(Dollars per
pair)
Price Sellers Receive
(Dollars per pair)
25.00
30.80
30.80
5.80
Using the data you entered in the previous table, calculate the tax burden that falls on buyers and
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.
The burden of the tax falls more heavily on the elastic side of the market.
?
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