Part 1The graph shows the market for tulips. Complete the graph. Draw only the objects specified in the exercise. 020406080100120140681012141618202224Quantity (bunches per week)Price (dollars per bunch)14801860Upper DDUpper SS 22 Upper S plus taxS+tax 11 Edit coordinates interactive graphDraw a point at the equilibrium price and equilibrium quantity. Label it 1.Now sellers of tulips are taxed $6 a bunch.Draw a curve that shows the effect of the tax. Label it.Draw a point to indicate the price paid by buyers and the quantity bought. Label it 2.Click toenlargegraphPart 2Who pays the $6 tax on tulips?Buyers pay $[input]enter your response here of the tax and sellers pay $[input]enter your response here of the tax.

Question

Part 1The graph shows the market for tulips. Complete the graph.​>>> Draw only the objects specified in the exercise. 020406080100120140681012141618202224Quantity (bunches per week)Price (dollars per bunch)14801860Upper DDUpper SS 22 Upper S plus taxS+tax 11 Edit coordinates interactive graphDraw a point at the equilibrium price and equilibrium quantity. Label it 1.Now sellers of tulips are taxed​ $6 a bunch.Draw a curve that shows the effect of the tax. Label it.Draw a point to indicate the price paid by buyers and the quantity bought. Label it 2.Click toenlargegraphPart 2Who pays the​ $6 tax on​ tulips?Buyers pay ​$[input]enter your response here of the tax and sellers pay ​$[input]enter your response here of the tax.

BlackTom AI · Accepted Answer

Reiterate the setup in your own words: the problem describes a tulip market with an initial equilibrium, then a $6 per-bunch tax imposed on sellers, and asks for the division of the tax burden between buyers and sellers. The provided answer values indicate that buyers end up paying 4 dollars of the tax and sellers pay 2 dollars of the tax.

First, consider what these numbers mean in terms of price shifts. A $6 per-bunch tax on sellers effectively reduces the price received by sellers by some amount and raises the price paid by buyers by the remaining amount, so that the total tax equals 6 dollars. If buyers pay 4 and sellers receive 2 less (net of tax), the price paid by buyers rises by 4 while the price sellers receive falls by 2. The difference between the pre-tax price and the post-tax outcomes must still sum to the $6 tax, which is consistent with 4 + 2 = 6.

Why does this division occur? Tax incidence depends on relative elasticities of demand and supply, not on who is legally responsible for remitting the tax. When buyers bear a larger share of the tax (here, 4 out of 6), it suggests that the demand curve is relatively inelastic compared to the supply curve: buyers’ quantity demanded doesn’t drop much as price rises, so buyers absorb more of the tax burden. Conversely, if the supply were more inelastic than demand, sellers would bear a larger share of the tax.

Now, analyze the first blank: how much of the tax do buyers pay? The calculation uses the intended outcome that buyers’ price increases by 4 dollars, which is 4 out of the 6-dollar tax. This indicates buyers’ burden is 4.

Next, analyze the second blank: how much of the tax do sellers pay? Since the total tax is 6 dollars and buyers pay 4, the remaining portion paid by sellers is 2 dollars. This 2-dollar figure represents the fall in the net price that sellers receive after the tax.

To summarize the logical flow in the context of tax incidence: the statutory tax is fixed at 6 dollars, but the actual burden is allocated between buyers and sellers according to elasticities. The given solution shows buyers bearing a larger share (4 dollars) and sellers bearing the smaller share (2 dollars), which aligns with the interpretation that demand is relatively more inelastic than supply in this market scenario.

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