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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 $11.60 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) 100 90 80 70 60 50 40 30 20 10 0 Before Tax After Tax Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax Burden (Dollars per pair) Graph Input Tool Elasticity Market for Shoes The burden of the tax falls more heavily on the Quantity (Pairs of shoes) Demand Price (Dollars per pair) 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 (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) 100 150.00 elastic side of the market Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 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. (?) 34.00 0.00

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 $11.60 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) 100 90 80 70 60 50 40 30 20 10 0 Before Tax After Tax Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax Burden (Dollars per pair) Graph Input Tool Elasticity Market for Shoes The burden of the tax falls more heavily on the Quantity (Pairs of shoes) Demand Price (Dollars per pair) 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 (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) 100 150.00 elastic side of the market Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 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. (?) 34.00 0.00

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand And Government Policies
Section: Chapter Questions
Problem 5QR
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12. Effect of a tax on buyers and sellers 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 $11.60 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) 100 90 80 70 60 50 40 30 20 10 0 Demand Before Tax After Tax 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax Burden (Dollars per pair) Graph Input Tool Elasticity Market for Shoes The burden of the tax falls more heavily on the Quantity (Pairs of shoes) Demand Price (Dollars per pair) 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 (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) 100 150.00 elastic side of the market. Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 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. (?) 34.00 0.00
Transcribed Image Text:12. Effect of a tax on buyers and sellers 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 $11.60 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) 100 90 80 70 60 50 40 30 20 10 0 Demand Before Tax After Tax 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Pairs of shoes) Buyers Sellers Supply Tax Burden (Dollars per pair) Graph Input Tool Elasticity Market for Shoes The burden of the tax falls more heavily on the Quantity (Pairs of shoes) Demand Price (Dollars per pair) 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 (Pairs of shoes) (Dollars per pair) Price Sellers Receive (Dollars per pair) 100 150.00 elastic side of the market. Supply Price (Dollars per pair) Supply Shifter Tax on Sellers (Dollars per pair) 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. (?) 34.00 0.00
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