5. calculating tax incidence\nsuppose that the canadian government decides to charge cereal producers a per…

5. calculating tax incidence\nsuppose that the canadian government decides to charge cereal producers a per - unit tax (a tax on each unit purchased). before the tax, 40,000 boxes of cereal were sold every week at a price of $7 per box. after the tax, 34,000 boxes of cereal are sold every week; consumers pay $8 per box, and producers receive $4 per box (after paying the tax).\nthe amount of the tax on a box of cereal is $ per box. of this amount, the burden that falls on consumers is $ per box, and the burden that falls on producers is $ per box.\ntrue or false: the effect of the tax on the quantity sold would have been larger if the tax had been levied on consumers.\ntrue\nfalse

5. calculating tax incidence\nsuppose that the canadian government decides to charge cereal producers a per - unit tax (a tax on each unit purchased). before the tax, 40,000 boxes of cereal were sold every week at a price of $7 per box. after the tax, 34,000 boxes of cereal are sold every week; consumers pay $8 per box, and producers receive $4 per box (after paying the tax).\nthe amount of the tax on a box of cereal is $ per box. of this amount, the burden that falls on consumers is $ per box, and the burden that falls on producers is $ per box.\ntrue or false: the effect of the tax on the quantity sold would have been larger if the tax had been levied on consumers.\ntrue\nfalse

Answer

Explanation:

Step1: Calculate the tax amount per box

The tax amount per box is the difference between what consumers pay and what producers receive. So, it is $8 - 4=$4$ per box.

Step2: Calculate the consumer - tax burden

The consumer - tax burden is the difference between the price after tax and the price before tax. So, it is $8 - 7=$1$ per box.

Step3: Calculate the producer - tax burden

The producer - tax burden is the difference between the price before tax and the price producers receive after tax. So, it is $7 - 4=$3$ per box.

Step4: Analyze the effect of tax on quantity sold

The effect of a tax on the quantity sold depends on the elasticities of demand and supply, not on who the tax is levied on. Whether the tax is levied on consumers or producers, the market - equilibrium quantity will be the same. So the statement is false.

Answer:

The amount of the tax on a box of cereal is $$4$ per box. Of this amount, the burden that falls on consumers is $$1$ per box, and the burden that falls on producers is $$3$ per box. False