4. Effect of a tax on buyers and sellers

The following graph shows the daily market for wine. Suppose the government institutes a tax of $40.60 per bottle. This places a wedge between the price buyers pay and the price sellers receive.

200 180 160 Demand Supply 140 120 100 PRICE (Dollars per bottle) Tax Wedge 80 60 40 20 0 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Bottles of wine)Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive befor- Quantity Price Buyers Pay Price Sellers Receive (Bottles of wine) (Dollars per bottle) (Dollars per bottle) Before Tax After Tax