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Attempts | | Do No Harm / 2 5. Calculating tax incidence Suppose that the local government of Columbus decides to institute a tax on
Attempts | | Do No Harm / 2 5. Calculating tax incidence Suppose that the local government of Columbus decides to institute a tax on cider consumers. Before the tax, 50 million cases of cider were sold every month at a price of $9 per case. After the tax, 44 million cases of cider are sold every month; consumers pay $14 per case (including the tax), and producers receive $4 per case. The amount of the tax on a case of cider is per case. Of this amount, the burden that falls on consumers is per case, and the burden that falls on producers is per case. [rue or False: The effect of the tax on the guantity sold would have been smaller if the tax had been levied on producers. O True O False
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