The following graph shows the weekly market for sweatpants in some hypothetical economy. Suppose the government levies a tax of $10.15 per pair. The tax places a wedge between the price buyers pay and the price sellers receive. 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 Price Sellers Receive (Pairs of sweatpants) (Dollars per pair) (Dollars per pair) Before Tax After Tax 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. Tax Burden Elasticity (Dollars per pair) Buyers Sellers The tax burden falls more heavily on the side of the market that is elastic.
The following graph shows the weekly market for sweatpants in some hypothetical economy. Suppose the government levies a tax of $10.15 per pair. The tax places a wedge between the price buyers pay and the price sellers receive. 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 Price Sellers Receive (Pairs of sweatpants) (Dollars per pair) (Dollars per pair) Before Tax After Tax 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. Tax Burden Elasticity (Dollars per pair) Buyers Sellers The tax burden falls more heavily on the side of the market that is elastic.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following graph shows the weekly market for sweatpants in some hypothetical economy. Suppose the government levies a tax of $10.15 per pair. The tax places a wedge between the
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
|
Price Sellers Receive
|
|---|---|---|---|
|
(Pairs of sweatpants)
|
(Dollars per pair)
|
(Dollars per pair)
|
|
| Before Tax |
|
|
|
| After Tax |
|
|
|
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.
|
|
Tax Burden
|
Elasticity
|
|---|---|---|
|
(Dollars per pair)
|
||
| Buyers |
|
|
| Sellers |
|
The tax burden falls more heavily on the side of the market that is elastic.
Transcribed Image Text: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 Price Sellers Receive
(Pairs of sweatpants) (Dollars per pair) (Dollars per pair)
Before Tax
After Tax
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.
Buyers
Sellers
Tax Burden
(Dollars per pair) Elasticity
The tax burden falls more heavily on the side of the market that is
▼ elastic.
Transcribed Image Text:3. Effect of a tax on buyers and sellers
The following graph shows the weekly market for sweatpants in some hypothetical economy. Suppose the government levies a tax of $10.15 per pair.
The tax places a wedge between the price buyers pay and the price sellers receive.
PRICE (Dollars per pair)
50
45
40
35
30
25
15
10
5
0
Demand
0 10
Supply
43, 26.4
Tax Wedge
++
20 30 40 50 60
70
QUANTITY (Pairs of sweatpants)
80
90 100
?
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