J 4pls explain in detail with the example under which tax system consumers are better off and why?I will thump up if explained properly. An income tax put on a person's income raises thesame amount of revenue as a quantity tax put onone good that the consumer purchases. Which ofthe following is true?The income tax is more efficient thanthe quantity tax, but consumer is worseoffThe income tax is less efficient than thequantity tax, but consumer is better offThe income tax is more efficient thanthe quantity tax, but producer is worseoffThe income tax is less efficient than thequantity tax, but producer is better offNone of the above

People are exposed to a consumption tax when they spend money, similar to how much they buy. When…

Answered: An income tax put on a person's income…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter17: Taxation And Resource Allocation

Section: Chapter Questions

Problem 2DQ

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Similar questions

a) The government decides to impose a unit-tax on producers instead of a unit-sales tax on consumers, arguing that this will protect consumers from negative effects of the tax. Your response to this statement should be that O This is incorrect reasoning, because consumers actually will be affected more by the tax on production than a sales tax O This is incorrect reasoning, because consumers are always hit harder by a sales tax O This is incorrect reasoning, because it doesn't matter whether the tax is imposed on sales or production, the impact is the same O This is the correct reasoning, because consumers do not pay for the production. b) Tom likes eBooks and iTunes. eBooks cost $4 and provide a marginal utility of 10; iTunes cost $1 and provide a marginal utility of 3. To maximize utility for the given budget, Tom should O Buy more eBooks and fewer iTunes O Buy fewer eBooks and more iTunes O Not change his current consumption choice
Suppose that the government imposes a tax onheating oil.a. Would the deadweight loss from this tax likely begreater in the first year after it is imposed or in thefifth year? Explain.b. Would the revenue collected from this tax likely begreater in the first year after it is imposed or in thefifth year? Explain.
Suppose that before tax was imposed 400 million gallons of gasoline was supplied at $3.00 per gallon.⦁ What happens when government imposes a tax of 60 cents per gallon on sellers? ⦁ How would such a tax affect the market for gasoline i.e. what is the new equilibrium? ⦁ On whom does the incidence of the tax fall more heavily? ⦁ How much government revenue will be generated by the excise tax? ⦁ What happens when government imposes a tax of 60 cents per gallon on buyers? ⦁ How would such a tax affect the market for gasoline i.e. what is the new equilibrium? PLease answer the parts above:)

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An income tax put on a person's income raises the same amount of revenue as a quantity tax put on one good that the consumer purchases. Which of the following is true?