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

per box. Of this amount, the burden that falls on consumers is

per box, and the burden that falls on producers 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.

True

False