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5. Calculati incidence Suppose that the Canadian government decides to charge cereal consumers a per-unit tax (a tax on each unit purchased). Before the
5. Calculati incidence Suppose that the Canadian government decides to charge cereal consumers a per-unit tax (a tax on each unit purchased). Before the tax, 15 billion boxes of cereal were sold every year at a price of $4 per box. After the tax, 10 billion boxes of cereal are sold every year; consumers pay $6 per box (including the tax), and producers receive $3 per box The amount of the tax on a box of cereal is burden that falls on producers is $2 per box. Of this amount, the burden that falls on consumers is per box True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers O true per box, and the O False
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