The market for Sugar Sweetened Beverages is a competitive market with a downward sloping demand curve and an upward sloping supply curve. Suppose that the government imposes a $1 tax on the producers of sugar sweetened beverages, which results in a $0.25 increase in the price paid by buyers of sugar sweetened beverages.
If, instead, the government had imposed the tax on buyers of sugar sweetened beverages, which of the following is true?

Question

The market for Sugar Sweetened Beverages is a competitive market with a downward sloping demand curve and an upward sloping supply curve. Suppose that the government imposes a $1 tax on the producers of sugar sweetened beverages, which results in a $0.25 increase in the price paid by buyers of sugar sweetened beverages.

If, instead, the government had imposed the tax on buyers of sugar sweetened beverages, which of the following is true?

Accepted Answer

Consumer surplus would be lower than when the tax was imposed on sellers.

Answer

The price paid by buyers (inclusive of the tax) would be $0.75 higher than price without the tax.

Answer

The price paid buy buyers (inclusive of the tax) would still be $0.25 higher than the price without the tax.

Answer

The tax burden would be solely bourne by the buyer.

Crowdly

The market for Sugar Sweetened Beverages is a competitive market with a downward...

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