Complete the following table by filling in the quantity sold, the price buyers pay, and the price sellers receive before and after the tax.
Quantity
Price Buyers Pay
(Bags of handbags) (Dollars per bag)
Price Sellers Receive
(Dollars per bag)
Before Tax
After Tax
Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity
of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.
Tax Burden
(Dollars per bag) Elasticity
Buyers
Sellers
The tax burden falls more heavily on the side of the market that is elastic.
