Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka because buyers must now pay $5.00 more for each bottle. The price paid by buyers is $2.00 per bottle more than it was before the tax because the tax causes the effective price received by sellers to fall by $3.00 per bottle. Sixty percent of the burden of the tax falls on sellers because they receive $3.00 less for each bottle of vodka they sell.

Suppose Buyers of Vodka Are Required to Send $5