Government decides to charge wine consumers tax

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Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 45,000 bottles of wine were sold every week at a price of $4 per bottle. After the tax, 39,000 bottles of wine are sold every week; consumers pay $5 per bottle (including the tax), and producers receive $1 per bottle. The amount of the tax on a bottle of wine is $----- per bottle. Of this amount, the burden that falls on consumers is $------ per bottle, and the burden that falls on producers is $---- per bottle. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers. True or False?

Reference no: EM131083525

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