Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

34. Effect of a tax on buyers and sellers The following graph shows the daily market for wine when the tax on sellers is set

image text in transcribed

34. Effect of a tax on buyers and sellers The following graph shows the daily market for wine when the tax on sellers is set at $0 per bottle Suppose the government Institutes a tax of $40.60 per bottle, to be paid by the seller. (Hint: To see the impact of the tax, enter the value of the tax in . zero the Taxon Sellers field and move the green line to the after-tax equilibrium by adjusting the value in the Quantity field. Then, enter were in the Tax on Seilers field. You should see a tax wedge between the price buyers pay and the price ellers receive) Use the graph input tool to help you answer the following questions. You will not be scored 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. a a . Graph Input Tool Market for Wine 10 Suggy 10 Quantity (Hotties of Demand Price er bottle 140 132.00 Supply Price (Dulan per bottle) 0.00 PRICE Doitus per botte #88888 Supply Shifter Demand Tax on Sellers (Dolors per hoche) 0.00 0 10 200 PO QUANTITY Totties of the 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 Price Sellers Receive (Pairs of shoes) (Dollars per pair) (Dollars per pair) Before Tax After Tax 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. Tax Burden (Dollars per pair) Elasticity less Buyers Sellers more The burden of the tax falls more heavily on the elastic side of the market

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting

Authors: John J Wild

6th Edition

1259621758, 978-1259621758

More Books

Students also viewed these Accounting questions

Question

Apply your own composing style to personalize your messages.

Answered: 1 week ago

Question

Format memos and e-mail properly.

Answered: 1 week ago