The demand and supply schedules in the market for shoes are given in the following table.

a. Find the initial equilibrium price and quantity.
b. Suppose the government imposes a new $1.00/unit tax on the producers of shoes. Find the new equilibrium price and quantity.
c. Senator Jones has proposed legislation that would change the shoe tax by switching it from the seller to the buyer. If the bill passes, what will be the new equilibrium price and quantity?
d. Will consumers prefer the original bill, will they prefer the Jones bill, or will they be indifferent between the two bills?
e. Will shoe producers prefer the original bill, will they prefer the Jones bill, or will they be indifferent between the two bills?

Transcribed Image Text:

Demand Supply $1.00 S1.50 S2.00 $2.50 S3.00 S3.50 $4.00 S4.50 S5.00 .000 900 800 700 600 500 400 300 200 100 200 300 400 500 600