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Suppose that the local government of Santa Fe decides to institute a tax on soda producers. Before the tax, 35 billion liters of soda were
Suppose that the local government of Santa Fe decides to institute a tax on soda producers. Before the tax, 35 billion liters of soda were sold every year at a price of $11 per liter. After the tax, 30 billion liters of soda are sold every year; consumers pay $16 per liter, and producers receive $6 per liter (after paying the tax). The amount of the tax on a liter of soda is 5 that falls on producers is S per liter. per liter. Of this amount, the burden that falls on consumers is per liter, and the burden
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