Question

Suppose that the U.S. government decides to charge wine producers a tax. Before the tax, 50 million bottles of wine were sold every month at a price of $6 per bottle. After the tax, 43 million bottles of wine are sold every month; consumers pay $9 per bottle, and producers receive $4 per bottle (after paying the tax).

The amount of the tax on a bottle of wine is ______ per bottle. Of this amount, the burden that falls on consumers is _______ per bottle, and the burden that falls on producers is _____ per bottle.

True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumer

Answer 1