b. Who pays more of the tax incidence? O Consumers and producers split the tax. O Producers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply is less than the price elasticity of demand.
b. Who pays more of the tax incidence? O Consumers and producers split the tax. O Producers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply exceeds the price elasticity of demand. O Consumers, because the price elasticity of supply is less than the price elasticity of demand.
Chapter4: Supply And Demand: An Initial Look
Section: Chapter Questions
Problem 2TY
Related questions
Question
![The following graph represents supply and demand in the market for tanning sessions. Suppose that the government imposes a $15
excise tax on providers of tanning sessions.
a. Using the graph below, demonstrate the effect of this tax on the market for tanning sessions.
Instructions: Use the tool provided, 'New line,' to draw; either a new supply or demand curve that reflects the impact of this tax. Plot
only the endpoints of the line. Then use the tool provided, 'New EQ,' to indicate the new equilibrium point.
$50
Tools
$45
$40
Supply,
New EQ
New line
$35
$30
$25
$20
$15
$10
$5
Demand,
10 20 30 40 50 60 70 80 90 100
Quantity (number of tanning sessions)
b. Who pays more of the tax incidence?
O Consumers and producers split the tax.
O Producers, because the price elasticity of supply exceeds the price elasticity of demand.
O Consumers, because the price elasticity of supply exceeds the price elasticity of demand.
O Consumers, because the price elasticity of supply is less than the price elasticity of demand.
Price (per tanning session)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45d55301-6883-4447-9047-399a7ba1efe1%2F1cc8d287-2672-45a8-a6ea-066ac23a1ac4%2Fo49qbtd_processed.png&w=3840&q=75)
Transcribed Image Text:The following graph represents supply and demand in the market for tanning sessions. Suppose that the government imposes a $15
excise tax on providers of tanning sessions.
a. Using the graph below, demonstrate the effect of this tax on the market for tanning sessions.
Instructions: Use the tool provided, 'New line,' to draw; either a new supply or demand curve that reflects the impact of this tax. Plot
only the endpoints of the line. Then use the tool provided, 'New EQ,' to indicate the new equilibrium point.
$50
Tools
$45
$40
Supply,
New EQ
New line
$35
$30
$25
$20
$15
$10
$5
Demand,
10 20 30 40 50 60 70 80 90 100
Quantity (number of tanning sessions)
b. Who pays more of the tax incidence?
O Consumers and producers split the tax.
O Producers, because the price elasticity of supply exceeds the price elasticity of demand.
O Consumers, because the price elasticity of supply exceeds the price elasticity of demand.
O Consumers, because the price elasticity of supply is less than the price elasticity of demand.
Price (per tanning session)
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