Question

Suppose that the U.S. Government decides to charge cola producers a tax. Before the tax, 30 billion cases of cola were sold every year at a price of $4 per case. After the tax, 23 billion cases of cola are sold every year; consumers pay $5 per case, and producers receive $2 per case (after paying the tax).

Answer 1

Answer:

 $3

$1

$2

False

Step-by-step explanation:

Here is the remaining part of the question :

The amount of the tax on a case of cola 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 consumers. True False

A tax is a compulsory sum levied by the government or an agency of the government on goods or services.

Tax on a case of cola = Amount consumers pay - amount producers receive

= $5 - $2 = $3

Burden of tax on consumers = $5 - $4 = $1

Burden that falls on producers = $3 - $1 = $2

False. the incidence of tax is not dependent on who is taxed