Suppose Buyers of Tequila Are Required to Send $1

question 84

Multiple Choice

Suppose buyers of tequila are required to send $1.00 to the government for every bottle of tequila they buy.Further,suppose this tax causes the effective price received by sellers of tequila to fall by $0.80 per bottle.Which of the following statements is correct?

• A) This tax causes the demand curve for tequila to shift downward by $1.00 at each quantity of tequila.
• B) The price paid by buyers is $0.20 per bottle more than it was before the tax.
• C) Eighty percent of the burden of the tax falls on sellers.
• D) All of the above are correct.

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