In each of the following examples, determine whether the price effect or the quantity effect dominates when the tax is applied.
a. The government raises taxes on the 10 million iPods sold each year from $10 per iPod to $20 per iPod. The new equilibrium quantity is 9 million iPods.
b. In response to concerns about chewing gum in schools, the government raises the tax on packs of gum from 20 cents per pack to 30 cents per pack. Before the tax increase, 50 million packs were sold each year. After the tax increase, 40 million packs are sold each year.
c. Worried that Americans are addicted to coffee, the government raises the 5-cent tax on a cup of coffee to 10 cents. Before the tax increase, 10 billion cups were sold each year. Afterward, 5 billion cups are sold each year.