The government needs to raise revenue and is considering which good to tax. If the government is keen to keep the deadweight loss as low aspossible, it should tax:The good with unit elasticity of demand and unit elasticity of supplyO The good with elasticity of demand of 0.75 and elasticity of supply of 0.75O The good with elasticity of demand of 0.75 and unit elasticity of supplyO The good with elasticity of demand above 1 and elasticity of supply above 1

Businesses eliminate deadweight loss in the long run by changing prices to attract customers. Firms…

ssible, it should tax: The good with unit elasticity of demand and unit elasticity of supply The good with elasticity of demand of 0.75 and elasticity of supply of 0.75 The good with elasticity of demand of 0.75 and unit elasticity of supply The good with elasticity of demand above 1 and elasticity of supply above 1

ssible, it should tax: The good with unit elasticity of demand and unit elasticity of supply The good with elasticity of demand of 0.75 and elasticity of supply of 0.75 The good with elasticity of demand of 0.75 and unit elasticity of supply The good with elasticity of demand above 1 and elasticity of supply above 1

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Cost Of Taxation

Section: Chapter Questions

Problem 6CQQ

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Only typed answer Green et al. (2005) estimate that the demand elasticity is minus−0.47 and the long-run supply elasticity is 12.0 for almonds. The corresponding elasticities are minus−0.68 and 0.73 for cotton and minus−0.26 and 0.64 for processing tomatoes. If the government were to apply a specific tax to each of these commodities, what incidence would fall on consumers? The incidence of a specific almond tax that would fall on consumers is nothing___percent. (Enter numeric responses using real numbers rounded to one decimal place.)
Scenario...Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U.S. Is this an example of elastic or inelastic with respect to price? considering price elasticity of demand, is the deadweight loss of a soda/junk-food tax relatively large or relatively small? Why? Would the tax be a good idea? Would it help reduce the number of obese people in the United States?
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Suppose that the Australian government imposes a sales tax on a product and both buyers and sellers share the burden of the If the price elasticity of demand for the product is perfectly inelastic. Which of the following is true? Select one: a. Sellers would pay more of the tax than buyers. b. Buyers would pay all of the tax. c. Buyers and sellers would share the tax burden equally. d. Sellers would pay all the tax.
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Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U.S. Do you think the demand for junk food is elastic or inelastic with respect to price? Based on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small? Why? Do you think taxing junk food would be a good idea? Based on your analysis, would it really help reduce the number of obese people in the United States? Explain.
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