Suppose the government imposes a tax of $4 per unit on a product. Before the tax, the equilibrium price was $10, and the equilibrium quantity was 120 units. After the tax, consumer... Suppose the government imposes a tax of $4 per unit on a product. Before the tax, the equilibrium price was $10, and the equilibrium quantity was 120 units. After the tax, consumers pay $12 per unit, and producers receive $8 per unit. The new equilibrium quantity is 100 units. Who bears more of the tax burden? (a) Consumers (b) Producers (c) The burden is equally shared (d) Neither
Understand the Problem
The question is asking us to analyze the impact of a tax imposed on a product to determine who bears more of the tax burden between consumers and producers. We will look at the change in prices paid by consumers and received by producers before and after the tax is implemented.
Answer
Consumers bear more of the tax burden.
Consumers bear more of the tax burden.
Answer for screen readers
Consumers bear more of the tax burden.
More Information
Consumers pay $2 more than the original price, while producers receive $2 less than the original price, indicating consumers bear the greater portion of the tax burden.
AI-generated content may contain errors. Please verify critical information
Thank you for voting!
