Answer:
The correct answer for the first scenario is total tax = $3, tax on consumer = $1 and tax on producer = $2.
For the second scenario, the answer will be False.
Explanation:
According to the scenario, given data is:
Price for consumer before tax = $7
Price for consumer after tax = $8
Price producer gets before tax = $7
Price producer gets after tax = $5
So, the amount of tax = Price consumer pay after tax - Price producer gets after tax.
= $8 - $5 = $3
Burden of tax on consumer = Price after tax for consumer - price before tax for consumer
= $8 - $7 = $1
Burden of tax on producer = Price producer gets before tax - Price producer gets after tax
= $7 - $5 = $2
For the second scenario, given statement will be false because the result will be same if the tax is levied on producer or consumer.