Suppose Buyers of Fountain Drinks Are Required to Send $0

question 3

Multiple Choice

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy.Further,suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink.Which of the following statements is correct?

• A)This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
• B)The price paid by buyers is $0.30 per drink more than it was before the tax.
• C)Forty percent of the burden of the tax falls on sellers.
• D)All of the above are correct.

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Definitions:

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