Homework (Ch 06) 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 $11.60 per bag. The tax places a wedge between the price buyers pay and the price sellers receive. ?) 50 45 210, 35 40 Supply Tax Wedge + PRICE (Dollars per bag) Demand 50 0 150 200 250 300 350 400 450 500 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. Quantity Price Buyers Pay Price Sellers Receive SearchComplete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Quantity Price Buyers Pay Price Sellers Receive (Bags of handbags) (Dollars per bag) (Dollars per bag) Before Tax After Tax 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. Tax Burden (Dollars per bag) Elasticity Buyers Sellers The tax burden falls more heavily on the side of the market that is elastic. Grade It Now Save & Continue Continue without saving Search