1. First Blank _____. ($2 /$7 /$5 /$0 /$6 /$8 /$1 /$3 /$4) 2. Second Blank ____.

Question

1. First Blank _____. ($2 /$7 /$5 /$0 /$6 /$8 /$1 /$3 /$4)

2. Second Blank ____. ($2 /$7 /$5 /$0 /$6 /$8 /$1 /$3 /$4)

3. Third Blank ___.  ($2 /$7 /$5 /$0 /$6 /$8 /$1 /$3 /$4)

x X Aplia: Student Question xe9 MindTap-Cengage Lear -), C D courses.aplia.com/ chegg Study | Guided So Roland Stephen Anderson I Free x - af servlet/quiz?quiz action-takeQuiz&quiz-probGuld-QNAPC0A801010000002ae008a0070000;&ctx-malkiatsandhul; 0077 Attempts: Average: /3 4. Calculating tax incidence Aa Aa Suppose that the U.S. government decides to levy a tax (such as an excise tax) on cola producers. Before the tax, 12 million cases of cola were sold every month at a price of $6 per case. After the tax, 6 million cases of cola are sold every month; consumers pay $8 per case (including the tax), and producers receive $5 per case. The amount of the tax on a case of cola is $2per case. Of this amount, the incidence that falls on consumers is $8per case, and the incidence that falls on producers is per case. Suggestions Session Timeout 54:18

Explanation / Answer

When an excise tax is imposed, the tax creates a wedge between buyer price and seller price.

So, tax per unit = Price that buyers pay - Price that sellers receive

= $8 - $5

= $3

Incidence on buyers = Post-tax buyer's price - Pre-tax buyer's price

= $8 - $6

= $2

So, Incidence on sellers = Total tax - Incidence on buyers

= $3 - $2

= $1

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