Suppose buyers of protein shakes are required to send $1.40 to the government for every protein shake they buy. Further, suppose this tax causes the effective price received by sellers of protein shakes to fall by $0.70 per protein shake. Which of the following statements is correct?
A) This tax causes the supply curve for protein shakes to shift downward by $1.40 at each quantity.
B) The price paid by buyers is $0.70 per shake more than it was before the tax.
C) Forty percent of the burden of the tax falls on buyers.
D) This tax causes the demand curve for protein shakes to shift downward by $1.40 at each quantity.
Correct Answer:
Verified
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