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Business, 15.02.2021 19:40 olsen6932

5. Calculating tax incidence Suppose that the U. S. government decides to charge wine producers a tax. Before the tax, 20 million bottles of wine were sold every month at a price of $4 per bottle. After the tax, 13 million bottles of wine are sold every month; consumers pay $7 per bottle, and producers receive $2 per bottle (after paying the tax). The amount of the tax on a bottle of wine isper bottle. Of this amount, the burden that falls on consumers isper bottle, and the burden that falls on producers isper bottle. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. True False

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