4.Assume that gasoline is od in competive marke in which demand is relaively inelatic and sup isrelatively elsi.(a) Draw a comeclylabeled graph ofthe asoline market. On you graph show the quilibrumprce andquantity of gsoine, labeled P, ndQ.E(b) Suppose the goverment imposes a $2 per uni ax on he roducers of gasoline. On your graph frompar (a),show each of he folowingaftr he tax imposed.(1) The price paid by buyer,labeled P,(i) The after-ax price eceied b sellr, abele P,(i) The quanity, abeled(c) Using the labeling on your graph, explain how tocalulae the total tax revenue collected by thegovernment.(d) Will the tax burden fall enirely on buyers, entrely on eles, more on buyers and less on seler,more onseller and es on buyers, or eqully on buyers and seller? Explain.

Assume that gasoline is sod ina competitive market in which demand is relaively inelasic and suppy is celatively elasic. (a) Draw a corectly abeled gaph of the gasliemarket. On your graph how the equilibrium price and quanity of gsolne, lbeled P,and Q. 16) Suppose the government imposes a $2 per uni ax onthe roducers of gasoline. On yourgrph from par (a),show each of hefollowin aftr he tax isimposed. () The price ad y byer, abeledP, (i) The after-tax price received byseler, labeled P, (ii) The qanty, abele Q, (c) Using the labeling on your graph, explain how to calculate te otal tax revenue collected bythe government.

Assume that gasoline is sod ina competitive market in which demand is relaively inelasic and suppy is celatively elasic. (a) Draw a corectly abeled gaph of the gasliemarket. On your graph how the equilibrium price and quanity of gsolne, lbeled P,and Q. 16) Suppose the government imposes a $2 per uni ax onthe roducers of gasoline. On yourgrph from par (a),show each of hefollowin aftr he tax isimposed. () The price ad y byer, abeledP, (i) The after-tax price received byseler, labeled P, (ii) The qanty, abele Q, (c) Using the labeling on your graph, explain how to calculate te otal tax revenue collected bythe government.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 7PA

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