The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per case) 200 140 100 40 20 0 Demand Tax Wedge Supply QUANTITY (Cases of craft beer) 500 Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Cases of craft beer) (Dollars per case) Price Sellers Receive (Dollars per case)

The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case. The tax places a wedge between the price buyers pay and the price sellers receive. PRICE (Dollars per case) 200 140 100 40 20 0 Demand Tax Wedge Supply QUANTITY (Cases of craft beer) 500 Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay (Cases of craft beer) (Dollars per case) Price Sellers Receive (Dollars per case)

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

The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case.
The tax places a wedge between the price buyers pay and the price sellers receive.
PRICE (Dollars per case)
200
180
160
120
100
80
80
40
20
0
Before Tax
After Tax
Demand
Buyers
Sellers
Tax Wedge
Supply
50 100 150 200 250 300 350 400
QUANTITY (Cases of craft beer)
Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
Price Buyers Pay
(Cases of craft beer) (Dollars per case)
Price Sellers Receive
(Dollars per case)
Tax Burden
(Dollars per case)
450
Using your answers from 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.
500
Elasticity
The tax burden falls more heavily on the side of the market that is
elastic.

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