Attempts: Average: /2 government decides to charge cola producers a tax. Before

Question

Attempts: Average: /2 government decides to charge cola producers a tax. Before the tax, 40 million cases of cola were sold every month at a price of la are sold every month; consumers pay $6 per case, and producers receive $2 per case (after paying s5 per case. After the tax, 34 million cases of col the tax). The amount of the tax on a case of cola is s per case. Of this amount, the burden that falls on consumers is s per case, and the burden that falls on producers is s per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O True OFaise Grade It Now Save & Continue Continue without saving

Explanation / Answer

Amount of Tax on Cola Case = Consumer Price - Producers Price ($6 - $2)   =    $4 Burden of tax on consumers = Consumer Price - Selling Price ($6 - $5)   =    $1 Burden Of Tax on Producers = Selling Price - Producers Price ($5 - $2)   =    $3 If the whole amount of the tax is leived on the customers then they Decrease their demand So if tax is leived on Customer and producers both it helps to make only a small change in demand So This Statement is False

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