aded Assignment | Back to Assignment Due Wednesday 09.26.18 at 11:00 PM Attempts

Question

aded Assignment | Back to Assignment Due Wednesday 09.26.18 at 11:00 PM Attempts: Score: 13 1. Calculating tax incidence Suppose that the U.S. government decides to levy a tax (such as an excise tax) on wine producers. Before the tax, 20 billion bottles of wine were sold every year at a price of $8 per bottle. After the tax, 8 billion bottles of wine are sold every year; consumers pay $10 per bottle (including the tax), and producers receive $6 per bottle. The amount of the tax on a bottle of wine is is per bottle. Of this amount, the burden that falls on consumers per bottle, and the burden that falls on producers is per bottle. QNA 3.16 C) 2004-2016 Aplia All rights reserved. Graded Save &Continue 2013 Cengage Learning except as noted. All rights reserved Continue without saving

Explanation / Answer

Old price = $ 8

New price = $ 10 per bottle

Producer received $6 per bottle (after tax)

Amount of tax on a bottle of wine = $ 4 (=$10-6)

Burden that falls on consumer = $ 2 (=$10-8)

Burden that falls on seller = $ 2 (=$8 - 6).

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