Final answer:
The tax on a case of cider is $7 per case, with consumers bearing $2 of this tax and producers bearing $5. This economic scenario is similar to sin taxes on cigarettes, where the burden and the price elasticity of supply and demand affect the degree to which consumption decreases due to the tax.
Step-by-step explanation:
The student's question is focused on the economic repercussions of a new tax imposed on cider consumers in Corpus Christi. The amounts given indicate that the tax per case of cider is the difference between what consumers pay and what producers receive, which is $13 (price paid by consumers) - $6 (price received by producers) = $7.
Out of this, the burden on consumers is the difference between what they used to pay and what they now pay, which is $13 (new price including tax) - $11 (initial price) = $2.
The burden on producers is the difference between the price they received before and after the tax, which is $11 (initial price) - $6 (price received after tax) = $5.
To compare, this situation can be associated with sin taxes, like those on cigarettes. These are taxes on goods deemed harmful to society. For example, cigarette taxes vary by state and come in addition to a federal tax. The impact of these taxes often leads to a decrease in consumption as the price increases. Estimating the change in consumption as a result of tax changes is a common question in economic analysis.
Impact of Taxes:
When a tax is imposed, there is a resulting change in quantity sold and the prices that buyers and sellers receive/pay. Determining the economic burden of a tax involves assessing how the tax affects both consumers and producers. The burden that falls on each group depends on the price elasticity of supply and demand. In the student's cider example, consumers experience less of the burden ($2) compared to producers ($5), which could suggest a difference in elasticity between supply and demand for this market.