Question

Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 25,000 cases of beer were sold every week at a price of $4 per case. After the tax, 19,000 cases of beer are sold every week; consumers pay $5 per case (including the tax), and producers receive $1 per case. The amount of the tax on a case of beer 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 True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers

Answer 1

The amount of the tax on a case of beer is $1 per case. Of this amount, the burden that falls on consumers is $1 per case, and the burden that falls on producers is $4 per case is true. No the effect of the tax on the quantity sold would have been larger if the tax had levied on producers is get effected by the quantity sold the ultimately the producer will charge the amount form the direct to the customer they will not going to beer the price of tax which is impose by the government only the quanity sold for the per case beer will be reduce.

As the price of the good increase the demand for the commodity will decrease and if the price of goods will decrease the goods become more dearer and as a result the supply will also increase.