Assume the following equation represents the demand for 6-packs of beer in Oakwo

Question

Assume the following equation represents the demand for 6-packs of beer in Oakwood: P = (-3/10)Q + 28 And the following equation represents the supply of 6-packs of beer in Oakwood: P = (25)Q Important: Please enter numbers, rounded to the nearest whole number (e.g. 10, 350), without any symbols (do not enter S) or commas for all of the numerical questions in this assignment. Also note that you will not be able to return to this question once you advance to the next part. Question 2 of 4 2.0 Points Accepted characters Assume the government placed a $14 tax on 6-packs of beer, with the statutory incidence placed on sellers. Also assume we know that the economic incidence from this tax is as follows: Buyers' Economic Incidence = $6 Seller's Economic Incidence = $8 Now assume the government keeps the same size tax, but places the statutory burden on the buyers. Calculate the buyers' economic incidence. Buyer Incidence S Calculate the sellers' economic incidence. Seller Incidences

Explanation / Answer

When the tax is imposed on buyers we againt get the same result

New demand is P = 28 -3Q/10 - 14 = 2Q/5

7Q/10 = 14

Q = 20 and it means price paid by sellers is P = 28 - 3*20/10 = 22 and received by sellers = 2*20/5 = 8

Hence buyers incidence is again 22 - 16 = 6 and sellers incidence is 16 - 8 = 8.

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