You can also directly change the values in the boxes with the white background b

Question

You can also directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. The market is initially in equilibrium. Then the government institutes a $10 per bottle tax to be paid by the seller. Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. The market is initially in equilibrium. Then the government Institutes a $10 per bottle tax to be paid by the seller. Fill in the following table with the quantity sold, the price buyers pay, and the price sellers receive before and after the tax. Using the data you entered in the preceding table, calculate the tax incidence that falls on buyers and sellers, respectively, and calculate the price elastically of demand and supply using the midpoint method. Enter your results in the following table. The incidence of the tax falls more heavily on the side of the market.

Explanation / Answer

Before the tax,

price for buyer=price recieved by seller=$62, quanity is 100

after the tax

price for seller=$72

price for buyer=$62

quantity =90

elasticity of supply is 0.

The tax incindece falls completely on the producer because supply is completely inelastic.

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