6. The Role of Government: Tax and plastic bags A. In the diagram, identify the lines that express the Marginal Social Cost, Marginal Private Cost, Marginal Private Benefit, and Marginal Social Benefit. Price per unit (P) Plastic bags (Q) B. Suppose that the government imposes a constant per-unit tax of 2 cent on producers. In the diagram, show the effect of this tax on the prices of plastic bags faced by buyers and sellers. C. Draw a diagram to show the effects of the same tax for a much less elastic demand (a steeper demand curve). Compared with your answers to 6B, who bears more of the tax burden, consumers or producers?
6. The Role of Government: Tax and plastic bags A. In the diagram, identify the lines that express the Marginal Social Cost, Marginal Private Cost, Marginal Private Benefit, and Marginal Social Benefit. Price per unit (P) Plastic bags (Q) B. Suppose that the government imposes a constant per-unit tax of 2 cent on producers. In the diagram, show the effect of this tax on the prices of plastic bags faced by buyers and sellers. C. Draw a diagram to show the effects of the same tax for a much less elastic demand (a steeper demand curve). Compared with your answers to 6B, who bears more of the tax burden, consumers or producers?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
Problem 24P: Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the...
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