Suppose that the U. S. government decides to charge cola consumers a tax. Before the tax, 20 million cases of cola were sold every month at a price of $5 per case. After the tax, 13 million cases of cola are sold every month; consumers pay $6 per case (including the tax), and producers receive $3 per case.
The amount of the tax on a case of cola is $ per case. Of this amount, the burden that falls on consumers is $ per case, and the burden that falls on producers is $ per case.
The effect of the tax on the quantity sold would have been larger if the tax had been levied on consumers.
a. True
b. False
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Suppose that the U. S. government decides to charge cola consumers a tax. Before the tax, 20 million...
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