Suppose that the U. S. government decides to charge wine producers a tax. Before the tax, 10 million bottles of wine were sold every month at a price of $4 per bottle. After the tax, 3 million bottles of wine are sold every month; consumers pay $7 per bottle, and producers receive $2 per bottle (after paying the tax). The amount of the tax on a bottle of wine is per bottle. Of this amount, the burden that falls on consumers isper bottle, and the burden that falls on producers isper bottle.
True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers.
a) True
b) False

Suppose that jim plans to borrow money for an education at texas a& m university. jim will need to borrow $25,000 at the end of each year for the next five years (total=$125,000). jim wishes his parents could pay for his education but they can’t. at least, he qualifies for government loans with a reduced interest rate while he is in school. he has a special arrangement with aggiebank to lend him the money at a subsidized rate of 1% over five years without having to make a payment until the end of the fifth year. however, at the end of the fifth year, jim agrees to pay off the loan by borrowing from longhorn bank. longhorn bank will lend him the money he needs at an annual interest rate of 6%. jim agrees to pay back the longhorn bank with 20 annual payments and the payments will be uniform (equal annual payments including principal and interest). (i) calculate how much money jim has to borrow at the end of 5 years to pay off the loan with aggiebank. a. $121,336 b. $127,525 c. $125,000 d. $102,020 e. none of the above