7. Effect of a tax on buyers and sellers The following graph shows the weekly market for handbags in some hypothetical economy. Suppose the government levies a tax of $46.40 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. 200 180 100 140 120 100 PRICE (Dollars per bag) 88888 Tax Wedge 40 201 9 0 10 100 Supply Demand 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bags of handbags) Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Before Tax After Taxi Quantity (Bags of handbags) Price Buyers Pay (Dollars per bag) Price Sellers Receive (Dollars per bag) 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 bag) Elasticity The tax burden falls more heavily on the side of the market that is i elastic. Grade It Now Save & Continue Continue without saving