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Suppose that the U.S. government decides to charge wine consumers a tax. Before the tax, 20 billion bottles of wine were sold every year at a price of $7 per bottle. After the tax, 13 billion bottles of wine are sold every year; consumers pay $8 per bottle (including the tax), and producers receive $5 per bottle.
The amount of the tax on a bottle of wine is per bottle. Of this amount, the burden that falls on consumers is $1 per bottle, and the burden that falls on producers is $2 per bottle.
True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers.
