Suppose Sellers of Liquor Are Required to Send $5

question 180

Multiple Choice

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle.Which of the following statements is correct?

• A)This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
• B)The effective price received by sellers is $5.00 per bottle less than it was before the tax.
• C)Forty percent of the burden of the tax falls on buyers.
• D)All of the above are correct.

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