Let's break down the problem step by step: ### Step 1: Read Values from the Graph #### **Before Tax (Equilibrium)** - **Equilibrium Quantity:** Find where supply and demand cross. From the graph, this is at **250 cases**. - **Equilibrium Price:** At this quantity, the price is **$100 per case**. #### **After Tax** - The tax creates a “wedge” between the price buyers pay and what sellers receive. The vertical distance between the supply and demand curves at the new quantity reflects the tax amount ($46.40). - **Buyers’ Price (after tax):** The top intersection of the tax wedge on the demand curve is **$123.20**. - **Sellers’ Price (after tax):** The bottom intersection of the tax wedge on the supply curve is **$76.80**. - **Quantity (after tax):** The new equilibrium after the tax is **200 cases** (vertical line through the tax wedge). --- ### Step 2: Fill in the Table | | Quantity (Cases) | Price Buyers Pay ($) | Price Sellers Receive ($) | |-----------------------|------------------|----------------------|---------------------------| | **Before Tax** | 250 | 100 | 100 | | **After Tax** | 200 | 123.20 | 76.80 | --- ### Step 3: Calculate Tax Burden on Buyers and Sellers - **Tax per case:** $46.40 - **Buyers' Burden:** Price buyers pay after tax - price before tax = $123.20 - $100 = **$23.20** - **Sellers' Burden:** Price before tax - price sellers receive after tax = $100 - $76.80 = **$23.20** --- ### Step 4: Calculate Elasticities Using the Midpoint Method #### **Elasticity of Demand** \[ \text{Elasticity of Demand} = \frac{(\Delta Q / \text{Average Q})}{(\Delta P / \text{Average P})} \] \[ \Delta Q = 200 - 250 = -50, \text{ Average Q} = \frac{250+200}{2} = 225 \] \[ \Delta P = 123.20 - 100 = 23.20, \text{ Average P} = \frac{100+123.20}{2} = 111.60 \] \[ \text{Elasticity of Demand} = \frac{(-50/225)}{(23.20/111.60)} = \frac{-0.222}{0.208} \approx -1.07 \] #### **Elasticity of Supply** \[ \Delta Q = 200 - 250 = -50, \text{ Average Q} = 225 \] \[ \Delta P = 100 - 76.80 = 23.20, \text{ Average P} = \frac{100+76.80}{2} = 88.40 \] \[ \text{Elasticity of Supply} = \frac{(-50/225)}{(-23.20/88.40)} = \frac{-0.222}{-0.262} \approx 0.85 \] --- ### Step 5: Fill in the Second Table | Tax Burden (per case) | Elasticity | |-----------------------|-----------------| | Buyers: $23.20 | 1.07 | | Sellers: $23.20 | 0.85 | --- ### Step 6: Interpret the Tax Burden - The tax burden falls more heavily on the side of the market that is **less elastic**. - **Elasticity of supply (0.85)** < **elasticity of demand (1.07)**, so the **sellers** bear more of the tax burden. --- ## **Summary Table Answers** **Table 1:** | | Quantity | Price Buyers Pay | Price Sellers Receive | |-----------------------|----------|------------------|----------------------| | **Before Tax** | 250 | 100 | 100 | | **After Tax** | 200 | 123.20 | 76.80 | **Table 2:** | | Tax Burden | Elasticity | |--------|------------|------------| | Buyers | $23.20 | 1.07 | | Sellers| $23.20 | 0.85 | **Conclusion:** The tax burden falls more heavily on the side of the market that is **less elastic** (sellers). --- **If you have further questions or need calculation details, let me know!**