The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case.The tax places a wedge between the price buyers pay and the price sellers receive.PRICE (Dolars per case)200180160140120100806040200+BuyersSellersDemandBefore TaxAfter TaxTax WedgeSupply0 100 200 300 400 500 600 700 800 900 1000QUANTITY (Cases of craft beer)Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.QuantityPrice Buyers Pay(Cases of craft beer) (Dollars per case)Price Sellers Receive(Dollars per case)Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticityof demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.Tax Burden(Dollars per case) ElasticityThe tax burden falls more heavily on the side of the market that iselastic.

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The tax places a wedge between the price buyers pay and the price sellers receive. 200 180 160 140 Demand Supply

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

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Question

The following graph shows the weekly market for craft beer in some hypothetical economy. Suppose the government levies a tax of $40.60 per case.
The tax places a wedge between the price buyers pay and the price sellers receive.
PRICE (Dolars per case)
200
180
160
140
120
100
80
60
40
20
0
+
Buyers
Sellers
Demand
Before Tax
After Tax
Tax Wedge
Supply
0 100 200 300 400 500 600 700 800 900 1000
QUANTITY (Cases of craft beer)
Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
Price Buyers Pay
(Cases of craft beer) (Dollars per case)
Price Sellers Receive
(Dollars per case)
Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity
of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.
Tax Burden
(Dollars per case) Elasticity
The tax burden falls more heavily on the side of the market that is
elastic.

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