Reference no: EM132477293

Suppose that the U.S. government decides to charge beer consumers a tax. Before the tax, 50 billion cases of beer were sold every year at a price of $4 per case. After the tax, 45 billion cases of beer are sold every year; consumers pay $6 per case (including the tax), and producers receive $3 per case.

Question 1: The amount of the tax on a case of beer is $____ per case. Of this amount, the burden that falls on consumers is $___ per case, and the burden that falls on producers isper case.

Question 2: True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on producers.

a. True

b. False