Now, we're going to look at how to determine which party bears the burden of the tax. Since the relative burden depends on the price elasticities of supply and demand, we'll need to calculate PED and PES.

The graph below shows the supply and demand for cheeseburgers in a fictional city. In an effort to promote healthier eating, the mayor decided to place an excise tax on cheeseburgers. The tax wedge is labeled on the graph. Price ($) 12.00 7 11.00 - 10.00 - 9.00 - 8.00 - Tax Wedge 7.00 - S 6.00 5.00 4.00 3.00 2.00 - 1.00 - D 0.00 10 20 30 40 50 60 70 80 90 100 110 120 Quantity (thousands) a. Pre-tax, the equilibrium price of a cheeseburger in this city was $ and thousand cheeseburgers were bought and sold. b. The mayor's excise tax on cheeseburgers is for $ per cheeseburger.Question 2 2 pts Now, we're going to look at how to determine which party bears the burden of the tax. Since the relative burden depends on the price elasticities of supply and demand, we'll need to calculate PED and PES. To calculate the elasticities, we need to determine the percent change in quantity and price for each party. The quantities will be the same for both parties, but the prices are different. For PED, we'll need to use the new price paid by buyers. For PES, we'll need to use the new price received by sellers. In other words, as you plug numbers into the formula, Q1 and P1 will be the pre-tax equilibrium price and quantities. Q2 will be the new quantity sold after the tax, which you identified in part a. For P2, we will need to use the new buyer price for our PED calculation, and the new seller price for the PES calculation (both of which we found in part a). f. The price elasticity of demand between these two points (pre- and post-tax) is [Round to 2 decimal places, and use the midpoint method. Don't forget the negative sign!] g. The price elasticity of supply between these two points is [Again, round to 2 decimal places, and use the midpoint method.]